






26 1816 




. 






Rent, Wages and Capital 



A BOOK FOR THE TIMES 



& ROGER S. WELTY 






& 




1886. 

LA PORTE PRINTING CO., PRINTERS, 

LaPorte, Indiana. 



1 



COPYRIGHT, 1886, 
By R. S. WELTY. 



PREFACE. 



Should the reader of this volume decide that it is only 
"one more" added to the great catalogue of books, he is 
at least asked to remember that there has been an effort to 
avoid the footsteps of those economists whose theories make 
one class the creature of another. It has been the desire, 
herein, to show that all the elements that constitute the 
State, are inter-dependent, and may, and must advance 
together. It has been the endeavor to take a hopeful view, 
and to look at things from their brighter side. The object 
has been to discourage the arbitrary antagonisms that 
exist between employers and employed. 

But, as will be perceived, the principal object has been 
a discussion of some phases of the Land Question, special 
reference being had to Henry George's proposition to 
make land common property. Given the essence, there is, 
perhaps, little in "Progress and Poverty" that has not 
previously, been advanced in some form. But the author 
of that work is elaborate and plausible and has generally 
avoided the muscular recommendations that have made 
Socialism disreputable. 

The writer will be considered heterodox on the subject 
of Rent, and by none, more so, than the Social Revolu- 



4 RENT, WAGES AND CAPITAL. 

tionists, who must be supremely orthodox on the subject 
of Rent, for, if no Rent, no confiscation thereof. And the 
schools, from behind the fortification of authorities, are 
indisposed to receive innovations upon their accepted 
dogmas. 

The subjects of Labor and Capital are considered only 
in their necessary relations to the Land Question ; that will 
answer for what may appear to be important omissions on 
those subjects. 




CONTENTS. 

CHAPTER I. 

The- uncertainty of Economic Theories. — The strength of Socialism. — 
The present distribution not unassailable. — The proposition to make 
Land common property. — What is Rent? — How Rent arises. — Pop- 
ulation. — The efficiency of Labor and improvements in the Arts. 

CHAPTER II. 

Francis A. Walker and Henry George. — The amount of Rent not per- 
manently fixed. — The Ricardian theory modified. — The effect of 
modern methods. — Rents have not increased. — The effects of trans- 
portation. — The selling price of Land does not effect Rent. — The 
effect of the diminishing productiveness of Land. — Virginia an 
example.— H. C. Cary's theory. — Land draws its principal value 
from its surroundings. — The susceptibility of Land to improvement. 

CHAPTER III. 

Improvements in the Arts. — Labor saving Machinery. — Rent is reduced 
as a proportion. — Capital more effective. — Labor is a partaker of the 
benefits of modern progress. — Speculation in Land. 

CHAPTER IV. 

Land holding not a monopoly. — The number the United States may 
subsist. — Land holders cannot withhold Land from use. — The testa- 
mentary divisions of Estates. — Large holdings of Land do not 
represent the accumulative power of Rent. — The Patrons of 
Husbandry. 



6 RENT, WAGES AND CAPITAL. 

CHAPTER V. 

The effects of modern distribution. — All classes dependent. — The prop- 
osition to confiscate Rent. — Taxation. — Capital largely represented 
in Land. — Land is reduced to a Capital basis. — Withholding Land 
from use. — The proposition to confiscate improvements. 

CHAPTER VI. 

The law of Wages. — Natural Wages. — No inflexible Law. — The division 
of the joint produce of Labor and Capital. — The relation of machin- 
ery to production. — No distinct remuneration for superintendence. 
— No extra compensation for risk. — No overproduction of Labor. — 
The benefits of machinery go to the community. — Labor the prin- 
ciple consumer. 

CHAPTER VII. 

The condition of Labor greatly improved. — The Wages fund Theory. — 
The return to Capital, or interest a declining per cent. — Labor not 
the servant of Capital. — The permanent tendency is toward an im- 
provement in the condition of Labor. 

CHAPTER VIII. 

Some disadvantages of modern methods. — Actual overproduction im- 
possible. — Disproportioned effort a cause of "hard times." — Nat- 
ural laws of trade disregarded. — The influence of Strikes. — How the 
government may contribute to depression. — Money. — Restrictions 
upon production no Remedy. — The effects of extravagance not im- 
portant. — No heroic remedy for "hard times." 

CHAPTER IX. 

Capital and Labor. — Capital a necessity. — The disadvantages of Capital. 
— The cost of a loaf of Bread. — The power of Capital. — But Labor 
assured of its Reward. 

CHAPTER X. 

Utopian Dreams. — The Materialism of Socialism. — Inequality is funda- 
mental. 



RENT, WAGES AND CAPITAL, 



CHAPTER I. 



The adjustment of social forces remains a complex and 
half-solved problem. Writers in the field of economic 
science have multiplied in recent years. Their beliefs have 
been presented, apparently, in mathematical lines, that, for 
the moment, seemed conclusive. The opinions of the 
early writers have, many of them, been cast aside and are 
valued, mostly, as the avenues to more correct thought; 
they have only given the key-note. The modern econo- 
mist has laboriously wrought out theories, that, to himself 
seem as indisputable as the multiplication table; but when 
he has looked up from the finished page, it is to behold 
that other thinkers, as learned, as profound, and as diligent 
as himself, are presenting ideas the very opposite to his 
own. In the meantime, the great multitudes jostle each 
other with an utter disregard of the economy contained in 
the books. 

We cannot put from us the fact, that that great element, 
designated as " Labor " is inoculated with discontent. It 
is quick to note the unequal distribution of material advant- 
ages. It sees the distance between the rich and the poor 
becoming greater each day. Believing in equal political 



8 RENT, WAGES AND CAPITAL. 

rights, and being taught that one man's gain is another's 
loss, it infers a natural antagonism between those who 
have wealth and those who have not. 

The discontent of the masses is the opportunity of 
Socialism. Never, until the present, have the theories of 
Community of property had respectful audience. Earlier, 
its efforts were spasmodic and revolutionary. It has 
learned wisdom, and now appeals to reason and not to pas- 
sion. It attaches itself to current forms and popular 
opinions, and while its influence is felt, its presence 
creates no apprehension, but while it learns conservatism, 
it remains aggressive. Its advocates advance boldly into 
the council chambers of the strongest government of civil- 
ization, and in the face of its Bismarck demand revolution 
and a re-organization of economic society from its founda- 
tions. It is significant that in the German Empire where 
power approaches the absolute, and political organization 
and discipline seem complete, that there, the opposition to 
the established order of society has its most determined 
advocates. And it is not less significant that in France, 
where the efforts to establish the liberties of Republicanism 
might be supposed to pacify discontent, that there Social- 
ism has its most enthusiastic adherents. 

The strength of Socialism is under-estimated by its 
opponents. Current estimates of the system are based 
upon the rabid utterances of agitators, who would violate 
every principle of law and order, thereby to overthrow the 
existing State. Popular opinions of Socialism are formed 
by the violent action of those who look upon secret murder 
and dynamite, as legitimate methods of warfare against 



RENT, WAGES AND CAPITAL. 9 

property-holders. But these are not the representatives. 
There are advocates, who bring talent and learning, and 
research to bear, and who thereby command respect. 
They recognize the danger, as well as the impossibility of 
a sudden overthrow of society as constituted. The con- 
servative advocates of Community cannot be charged with 
the attempt to appropriate the property of others, because 
they only expect, in their day, to establish the beginning of 
a system they believe better than the present. 

Socialists of force and learning command recognition 
from the highest places. Of Lassalle, Bismarck thus 
speaks: "Lassalle was one of the most gifted and amiable 
men with whom I have ever associated. * * * Our conver- 
sations have lasted for hours, and [ have always regretted 
their close. * * * It would have given me great pleasure 
to have had a similarly gifted man for a neighbor in my 
country home." {French and German Socialism, by R. T. 
Ely.) Praise of this kind, by the German Chancellor, is 
exceptional, and the individual upon whom it was bestowed 
was unreservedly a Socialist. He demanded State inter- 
ference and the abolition, not only of private property in 
land, but also, in Capital and the products of Labor. 

The violent type of European Communists has been 
represented in the United States by such characters as 
Herr Most, whose incendiary utterances disgusted the 
nation; but we cannot judge of the whole by such as he; 
he was repudiated by his party at home, and at a Socialist 
congress held in Switzerland, was, by an almost unanimous 
vote, expelled from his party. 

The abuses of present society are many. It requires no 



10 RENT, WAGES AND CAPITAL. 

great skill to bring together a long array of indictments 
against it. If the evils of the present were placed side by 
side with the prospective ones of the Socialist period, it 
would not be at all certain that the latter would be the most 
formidable. What with our wealth, poverty; our thieves, 
robbers, tramps; our alms-houses and prisons: our 
"Maiden tributes;" can we look with scorn upon the 
fancies of the dreamers ? 

The greatest strength of the present economic distribu- 
tion is, after all, in the fact that it is in possession. With 
the great majority, the fact that things are, and for a long 
time have been, is the best reason why they should con- 
tinue to be. Generations ago the people of Ireland were 
dispossessed of their lands, and the wrong is considered 
sanctified by the lapse of time. Perhaps those Englishmen, 
who so greatly admire Henry George's Semi-Socialism, 
will still adhere to the existing conditions, lest, in the con- 
fiscation of Rent, tardy justice would prevail on the 
Emerald Isle. But we must confess that society is vulner- 
able in the heart as well as in the heel, and the Political 
Economy that justifies all, is a doubtful, as well as a 
'"dismal" Science. 

But I do not desire to limit myself to the generalities of 
the subject. The strength and merits of Socialism we 
may admit, but that it is a better system is not thereby 
proven. 

The deductions of that analytical, though erratic Socalist, 
Henry George, as set forth in his " Progress and Poverty," 
are unique in this, that the unequal distribution of wealth, 
and all the evils that attend, are attributed to a single 



RENT, WAGES AND CAPITAL. II 

cause ; namely, to Rent paid for natural forces ; principally 
for the natural qualities of land. In illustration I quote 
as follows: — "We have traced the unequal distribution of 
wealth, which is the curse and menace of modern civiliza- 
tion, to the institution of private property in land. We 
have seen that as long as this institution exists no increase 
in productive power can permanently benefit the masses; 
but, on the contrary, must tend to still further depress their 
condition. We have examined all the remedies, short of 
the abolition of private property in land, which are cur- 
rently relied on or proposed for the relief of poverty and 
the better distribution of wealth, and have found them all 
inefficacious or impracticable." 

" There is but one way to remove an evil — and that is, 
to remove its cause. Poverty deepens as wealth increases, 
and Wages are forced down while productive power grows ; 
because land, which is the source of all wealth and the 
field of all labor, is monopolized. To extirpate poverty, to 
make Wages what justice commands they should be, the 
full earnings of the laborer, we must therefore substitute 
for the individual ownership of land a common ownership. 
Nothing else will go to the cause of the evil — in nothing 
else is there the slightest hope." 

Of his theory he further says that, " Every step has 
been proved and secured," and " In the chain of reasoning 
no link is wanting and no link is weak." 

He states his opinions with the courage of a Napoleon. 
But when we remember the innumerable forces and cir- 
cumstances that unite to mould the conditions of human 



12 RENT, WAGES AND CAPITAL. 

existence, to be told that a single one of them contains all 
the others is incredible. 

The proposition is to confiscate Rent, which is equiva- 
lent to the confiscation of Land. To correctly understand 
the effect of this proposition it is necessary to know how 
Rent arises; and, also, whether the amount of it is sufficient 
to allow the prominence that has been given it in the 
distribution of wealth. For the information of those who 
have not made themselves familiar with economic studies, 
it is sufficient to say that Rent, proper, is the amount paid 
for the natural qualities of land or for natural forces. All 
improvements, houses, barns, fences, stores, manufactories; 
all fertilizing, irrigation, ditching; all plowing, sowing 
and reaping — in fact, all improvements whatsoever, 
represent the expenditure of Capital and Labor; and 
the nominal Rent paid for these is not Rent in fact, but 
interest on Capital and Wages for Labor. Economic Rent 
is equal to that portion of the product that remains after 
the cost of production, including Wages and interest, has 
been deducted. 

Rent arises from a combination of three causes: ist, 
The difference in qu ality and productiveness of land : 2d, The 
difference in the susceptibility of land to the re-production 
of exhausted fertility: 3rd, The increase of population. 
The first and last of these causes arise in the first instance 
and are held generally to contain the entire phenomena of 
Rent. The influence of the second is felt last, and I shall, 
therefore, leave it to assert itself in its proper connection. 

The illustration following is similar to the one that most 
writers on this subject have adopted: — We shall say that 



RENT, WAGES AND CAPITAL. 1 3 

land is of three grades of productiveness, yielding twenty 
for the first, fifteen for the second, and ten for the third 
grade. With the settlement of a country it is assumed 
that the land yielding twenty will be occupied first. It is 
further assumed that the occupation will be confined to the 
land yielding twenty until that grade is all taken. If pop- 
ulation still increases it will be compelled to resort to the 
second grade of land, the product of which is fifteen. At 
this point Rent arises, and the amount of it will be deter- 
mined by the difference between twenty, the product of the 
first, and fifteen, the product of the second; the latter being 
the margin of cultivation. It will be a matter of indiffer- 
ence to the settler whether he occupies the second grade 
that yields fifteen, and pays no Rent, or whether he leases 
a portion of the first grade, producing twenty, and pays 
five as Rent to the owner: in either case he would have 
fifteen as the product of his labor, and the owner of the 
first grade cannot command more than five for Rent until 
the second grade is all taken. 

If population still increases until the second grade is all 
occupied, the same process will be repeated and production 
forced down to the third grade, yielding ten. The margin 
of cultivation is now reduced from land yielding fifteen, to 
land yielding ten, the last paying no Rent. By a repetition 
of the same process the second grade will now yield five 
in Rent and the first will yield ten. It will again be a 
matter of indifference to the settler whether he occupies 
the third, which yields ten and pays no Rent, or again 
whether he occupies the second, yielding fifteen, and sur- 
renders five of the product as Rent; or, still again, wheth- 



14 RENT, WAGES AND CAPITAL. 

er he leases the first, and pays the owner ten, as Rent; in 
either case he will have ten as the product of his labor. 

I have divided land into three grades of quality for 
simplicity of illustration. There are many more grades, 
however, and there is no regular gradation. It will be 
perceived that, as population increases, production will be 
forced upon poorer, and again upon* poorer land, until the 
poorest is occupied, and which may yield a bare subsistence. 
As population increases and is compelled to occupy the 
poor lands, there arises the phenomena known in political 
economy as a "press upon subsistence." This is the sub- 
stance of the Malthusian theory, that population may 
increase to its own injury, or beyond the means of sub- 
sistence. 

From the foregoing, Rent appears a prominent factor in 
distribution, and if this prominence can be maintained to 
the last, it is evident that the law of Rent must be to a 
considerable degree the law of Wages. As production is 
lowered to the poorer lands, the predisposition of Wages is 
to fall until they are the equivalent of the return of labor 
on the poorest land in use, which pays no Rent. If the 
Wages paid by the owners of the good lands, or those 
obtainable in industrial pursuits, were greater than the 
return to labor on the margin of cultivation, then, the 
working of the poor lands would be abandoned, and labor 
would gradually find its way to where it is better paid. 
If the Wages paid in the industries were less than the return 
to labor on the margin of cultivation, then the course of 
labor would be to the lands that pay no Rent. If there 
are no circumstances that incline to abrogate this seemingly 



RENT, WAGES AND CAPITAL. 1 5 

large portion of Rent, then, as increasing population 
necessitates the lowering of the margin of cultivation, it 
will be impossible for Wages to go higher, and there must,, 
on the contrary, be a leveling down to uniformity with the 
smallest return. 

The law of Rent as outlined above, is known as the 
Ricardian law, and is generally accepted. The law of 
Wages here shown, which is the parallel of the law of 
Rent, is not common, and it is thus formulated by Mr. 
George: — "Wages depend upon the margin of production, 
or upon the produce which labor can obtain at the high- 
est point of natural productiveness open to it without the 
payment of Rent." I shall show hereafter that there are 
conditions which greatly modify that which now seems 
the overshadowing power of Rent, if, in fact it is not made 
to disappear as a controlling factor in distribution. If this 
is shown, then Wages must seek some other law or com- 
bination of circumstances by which they are controlled. 

The author of "Progress and Poverty," having elevated 
Rent to the position of supreme dictator in distribution, 
thereupon proceeds to show that it is the prolific source of 
vice, crime, and ignorance — that it creates periodical de- 
pressions, enslaves laborers; and, finally, ends in want and 
starvation. As a remedy for these cumulative evils, the 
proposition is, that Rent shall be appropriated by the State 
and equally distributed, or expended for the public good. 
The well known theories of Malthus, that population may 
increase beyond the means of subsistence, are entirely 
repudiated, only, as Rent and the alleged monopoly oi 
land contribute to that end. 



1 6 RENT, WAGES AND CAPITAL. 

The effect of an increase of population beyond a certain 
point, is, undoubtedly, toward a press upon subsistence, 
although this tendency is neutralized by opposing influences. 
Mr. George allows the Malthusian theory full force if 
Rent is appropriated by land-owners, but none at all if 
paid to the State. It is impossible to conceive how the 
confiscation of Rent can arrest the effects of an increase of 
population, and it does not. In a former illustration we 
have divided land into three grades, yielding ten, fifteen, 
and twenty. Let us suppose that Rent is paid to the 
State and equally distributed among the people, or expend- 
ed for the public benefit. When only the first grade of 
land is occupied the average return would, of course, be 
twenty, but when cultivation is forced upon the second 
grade the average falls to seventeen and one-half; and 
again when increasing population necessitates the taking 
of the third grade, yielding ten, the average again falls, 
and is fifteen, and thus, while Rent increases in amount, it 
is, compared with population, reduced as a proportion. 
As cultivation is forced upon still poorer lands the propor- 
tion is still further reduced. The equal distribution of 
Rent cannot prevent this; it only distributes the disadvan- 
tage upon the whole community. 

But to disprove the Malthusian theory and affirm his 
own, Mr. George makes the astonishing assertion that an 
increase of population and the increasing efficiency of 
labor have the same effect as increasing the fertility of 
land — that with equal distribution, an increase of popula- 
tion should make every man richer, instead of poorer. It 
is thus expressed: — "For the increased powers of co-op- 



RENT, WAGES AND CAPITAL. 1 7 

eration and exchange which come with increased popula- 
tion are equivalent to — nay, I think we can say without 
metaphor, that they give — an increased capacity to land," 
and that "an improvement in tools and machinery, which 
will double the result of labor, will manifestly, on a par- 
ticular piece of ground, have the same effect on the 
produce as a doubling of the fertility of the land." And 
again: — "For the power of producing wealth in any form 
is the power of producing subsistence." 

He evidently confounds the natural productiveness of 
land with the increasing efficiency of labor, and makes 
them subject to the same law. Population, efficiency of 
labor, and improvement in the arts, may increase indeffi- 
nitely, but there is a limit to the possible return and fertility 
of land beyond which it cannot be carried. The limit to 
the productiveness of land is two-fold — it is limited in 
amount, the earth being a fixed quantity, and it is limited in 
resource; but its resources may be increased, though not 
indefinitely. To illustrate: The average product of land 
may be fifteen bushels of wheat per acre, but with im- 
proved methods of agriculture it may be raised to forty 
bushels or more; but, it does not follow that, as population 
and improvement in the arts increase, the product of an 
acre can be increased likewise and made to yield a hundred, 
or two or three hundred bushels. 

There is an absolute limit to the capacity of land that 
cannot be exceeded. When that point is reached and 
population still increases, then there is a diminishing per 
capita return and a "press upon subsistence" — not neces- 
sarily to the starvation point, but to the lessening of 



1 8 RENT, WAGES AND CAPITAL. 

enjoyments. The largest per capita return may be reached 
before land reaches its largest possible production, for the 
reason that, as the limit draws nearer, the rate of approach 
will be slower; just, as when a ball is thrown into the air 
it will at first rise rapidly, and then slower. When the 
rate of increase of population passes the rate of increase in 
the productiveness of land, the effect will be the same as 
a decrease in the productiveness of the land. 

But, do the improvements in the arts, in machinery, and 
the methods of cultivation have the "same effect on the 
produce as doubling of the fertility of the land?" Is Mr. 
George right when he says, "The power of producing 
wealth in any form is the power of producing subsistence?" 
Utility must not be confounded with value and wealth. Sub- 
sistence holds in the direct or indirect life sustaining power 
of a product, and not in the cost of its production, or in its 
exchange value. Things of great usefulness are some- 
times of small value, while others of great value do not 
contribute much to subsistence. The fine plate on the 
tables of the wealthy may be of great value, but they 
contribute no more, perhaps not as much, to the sustaining 
of life as the earthenware upon the poor man's board. An 
artizan may carve a fine table and thereby create an article 
of much value: by so doing he has added to the amount 
of its value, to the wealth of the country, but he has not 
added, to that amount, to the subsistence present; nor 
again, does it represent to the amount of its value, the pro- 
ductiveness of land. 

An agriculturalist raises one hundred bushels of wheat 
and becomes the producer of that much wealth and sub- 



RENT, WAGES AND CAPITAL. 1 9 

sistence; an artizan produces a musical instrument of the 
same value — do we say that subsistence to the equivalent 
of two hundred bushels of wheat has been produced? No, 
because the instrument is a contribution to enjoyment, to 
refinement and culture, and no more life is sustained on 
account of it. Its use cannot be classed with that of food 
and shelter. The instrument is the equivalent of the wheat 
in value, and an equal contribution to wealth, but not in 
utility to subsistence. An exchange is made, the wheat 
for the instrument, do we now say that the artizan has 
produced the subsistence in his possession? No, because 
the agriculturalist has been credited with having produced 
it and it cannot be twice accounted for. We see, therefore, 
that wealth has been produced to the equal of two hundred 
bushels of wheat, but subsistence only to the amount of 
one hundred bushels. The confusion arises from the fact 
that the artizan, having produced an instrument of value, 
with which he commands subsistence, is held as having 
produced it. He commands subsistence, not because the 
instrument he has produced contains that element, or 
quality, but because his production contains the element 
of value, which is everywhere a similar quality, and ex- 
changable. When the instrument was exchanged for the 
wheat, it was not an exchange of utilities, or an exchange 
of subsistence, but an exchange of values. There were no 
estimates made to discover whether the usefulness of the 
one was equal to that of the other, but simply to find 
whether their values were the same. As the commercial 
world estimates, there are no exchanges of utilities, or the 
means of existence but only an exchange of values. 



20 RENT, WAGES AND CAPITAL. 

The following will illustrate: A house is being built; 
to that end it is necessary that timber shall be brought 
from the forest and placed in position in the most substan- 
tial and servicable manner. The workmen, who do this, 
contribute to subsistence, because the house is necessary 
for shelter and protection, and, in fact, for the very exist- 
ence of the man who occupies it. But, suppose that the 
builder is a man of wealth — that he is not satisfied, simply, 
that the timber is placed in position to do its greatest 
service, but that the workmen are employed to multiply 
their labors upon it until it becomes an elegantly wrought 
and finely finished mansion — can we say that in all this 
there has been a contribution to subsistence? Certainly 
not ; the labor done to place it in the position of its greatest 
utility was that, but from that point, the character and 
object of their labor changed — from that point it becomes 
a contribution to the taste, or perhaps the vanity, of the 
builder — from that point it brings no greater shelter, nor 
does it turn more rain or storm. 

But to further illustrate: A thousand persons have set- 
tled upon an island, all available space being occupied. 
By the adoption of the best methods of cultivation, the 
land yields its highest possible production, and all of its 
product is necessary for the support of its population. Let 
it be supposed that the population remains stationary and 
that there is no communication with the outside world — 
that invention and the increasing intelligence of the people 
increase the efficiency of labor by gradual process — how 
will this greater efficiency and power of production exert 
itself ? Not by increasing the product of land, or the 



RENT, WAGES AND CAPITAL. 21 

means of subsistence, for that limit has been reached. The 
natural course would be to refined pursuits; to the refine- 
ment of the product now stationary in amount. Using the 
same materials, houses might be more finely finished; furn- 
iture of ordinary workmanship might be made more 
luxurious; their clothing, though not made more substan- 
tial, might be of finer fabrics. In innumerable ways 
their increasing capacity to labor may employ itself. 
Thus it is that more labor, and consequently more wealth, 
would be represented in their products, but not more 
subsistence, or greater quantity, or greater utility. I deny 
therefore that the power of producing wealth in any form, 
is the power of producing subsistence. 

In the foregoing, it is shown, I think, satisfactorily, that 
there is a limit to the productiveness of land; that to double 
the efficiency of labor does not in effect double the capacity 
of land, and that to produce wealth is not always to pro- 
duce subsistence. It now remains to be shown that 
another proposition of Mr. George's made in the same 
connection, is, at least, only partly true. 

He says in substance that, with increasing population 
the productiveness and efficiency of labor is greatly en- 
hanced. In support of his theories he finds it necessary to 
give this proposition the largest possible importance. To 
this end, he draws an elaborate picture of the pioneer 
settler, who goes beyond civilization, to make himself a 
home in the wilderness. It is shown that away from easy 
communication with his fellows the pioneer has many 
disadvantages — that he has long distances to go to get 
necessary supplies — that he has no neighbors to whom he 



22 RENT, WAGES AND CAPITAL. 

can go in case of need — that if he raises more grain than 
he can use he has no market — that he is without schools, 
churches, or postoffice. But now comes another settler, 
and another, and another, and he has neighbors with whom 
he can co-operate; soon they have a store, a postoffice, 
then a railroad, and a market for his surplus. A town is 
started and he has churches and schools. As a result of 
this increase of population his labor becomes much more 
profitable, and his products more valuable, although his 
land is not more fertile or productive. 

Upon an argument similar to the above he relies to show 
that increasing population creates no press upon subsist- 
ence, but ought with equal distribution enhance the enjoy- 
ments of life. 

Frontier life, as it used to be, may serve as a foundation 
for a story of romance and adventure, but frontier life as 
it is now must have precedence in illustration of present 
social phenomena. A few years have revolutionized the 
settlement of new countries. Now, instead of the settler, 
the railroad has "taken to the woods;" it has been carried 
even hundreds of miles beyond the settlements, connecting 
separate civilizations. Stations are established in the 
wilderness and on the plains — the country is laid out into 
counties, townships, and sections. Emigration now begins 
and immediately an embryo town springs up, and with it 
comes a postoffice, and stores, schools, churches, doctors, 
lawyers, preachers, and always that other evidence of civil- 
ization — a drinking saloon! 

The stations and towns become distributing points for 
agriculture, which now begins and spreads in every 



RENT, WAGES AND CAPITAL. 23 

direction. For the crude methods of the early settler there 
is substituted the latest inventions. The Western farmer 
breaks land for his first crop with the latest improved 
plow. He plants his first crop of corn with a patent 
planter; for the old plantation hoe he substitutes a sulky 
cultivator. He sows his first crop of wheat with the best 
drill in use— he cuts his first harvest with a self-binder — he 
thrashes it with steam power, and hauls it to market in a 
wagon of the latest Chicago pattern! He secures his first 
crop with a saving of labor and an efficiency of method 
that would astonish the drudging farmer in countries cen- 
turies old! And yet, Mr. George would have us believe 
that labor is not efficient, and production profitable in new 
countries, but that efficiency and profit increases with 
population and reaches their highest in those centers. 
Values are not as high in new countries, but this is off-set 
to a great extent by the greater fertility of land and the 
larger product. 

Mr. George expects to add much strength to his argu- 
ment by proving the great inefficiency of labor in new 
countries, and that the productiveness and return of labor 
increase indefinitely with the increase of population. This 
increasing efficiency of labor, it is claimed, ought to result 
in an increase of Wages, but that, on the contrary, as 
wealth and population increase, Wages are lowered and 
laborers reduced to poverty— and all because of Rent! 
This is a false representation. He tells us distinctly that 
Wages are higher in new countries than in old. Now it is 
almost an impossible economic proposition that Wages 
should be high where labor is so very inefficient and the 



24 RENT, WAGES ANd CAPITAL. 

return small. When, in another connection, he attempts 
to prove, that the increase of values attending an increase 
of population should accrue to the State, he draws a very 
gloomy picture of the great labor of, and small return to, 
the pioneer settler; if this is a correct portrayal, it is impos- 
sible to conceive how wages could be gradually lowered 
from what they would be under such unfavorable circum- 
stances. 

Instead of Wages decreasing, they are, in populous 
countries, sufficient to enable the laborer to have advantages 
that are not to be obtained on the frontier. The increase 
of enjoyments that the laborer should have with an increase 
of population, he secures up to the point of "diminishing 
return." 

When we remember the great change in frontier 
methods, these arguments lose their force. It is true, how- 
ever, that the efficiency of labor does increase with 
population, but that increase is scarcely perceptible beyond 
a certain point. When population reaches that point which 
admits of an easy sub-division of labor, its influence to a 
greater efficiency is slight. Labor is as productive and 
efficient in the United States as it is in England, although 
the density of population is much greater in the latter 
country. There ought to be an immense difference, if the 
arguments of " Progress and Poverty " are to be trusted. 
England has some commercial advantages that the United 
States have not, but there are other reasons therefor, not 
considered in this connection. Of improvements in the 
methods of labor, and their effects, I shall have occasion 
to again refer. 



RENT, WAGES AND CAPITAL. 25 

But must we, in view of the foregoing, accept the Mal- 
thusian theory of population? Is there a danger of a 
" press upon subsistence " that should make us welcome 
epidemic, disaster and disease, as a means of keeping down 
population? Should society place artificial restrictions to 
reduce the number of births? We trust the world has 
out-grown these absurdities. This theory represents the 
earth as a boat lost at sea, with insufficient provision to keep 
alive those who are in it, and thus making necessary the 
sacrifice of some of their number. Such a theory makes 
life a grab game. It tells man, by inference, that there is 
not enough for all, and authorizes him to prey upon his 
fellows. The predisposition of population is to increase to 
its own disadvantage, but with millions of acres of unem- 
ployed lands, such an increase must be local and can 
assume no alarming proportions. But the supposed 
dangers of over-population are neutralized by the same 
causes that reduce Rent as a factor in distribution, as shall 
appear in succeeding chapters. 



26 RENT, WAGES AND CAPITAL. 



CHAPTER II. 



I have thus far allowed Rent the importance claimed for 
it by the majority of economic writers, including Mr. 
George. If the amount of Rent proper, or that paid for 
natural forces only, is not large, then the elaborately 
wrought pages of "Progress and Poverty" contain only 
meaningless effusions. 

Francis A. Walker, in a recent volume, entitled "Land 
and its Rent," has, by considerable length of argument, 
shown that Mr. George has overestimated Rent; but 
Walker, in his turn, has elevated Rent to a position, in 
importance, not much short of that given it by the other. 
The difference between them is one of degree only, and if 
the amount of Rent is as much as the latter claims it to be, 
then Mr. George's arraignment of society is good; and 
if his subsequent reasonings can be sustained, his theory 
of State interference is reasonable. How then, shall we 
determine the amount of Rent and the position to which 
it must be assigned in economic distribution? It is impos- 
sible to determine with exactness; many of the conditions 
that raise and lower it are local and temporary, others are 
permanent. The best estimates are only approximate. 

The Ricardian doctrine of Rent, has, heretofore, been 
generally accepted ; but the developments of recent years 
have greatly modified this theory. The minute sub-di- 



RENT, WAGES AND CAPITAL. 27 

vision of labor, in conjunction with modern facilities of 
transportation, have assumed an active and controlling 
force in the determination of the current rates of Rent. 
The cost of many of the necessaries of life, in the popula- 
tion centers, is the cost of their production in new countries, 
and on the margin of cultivation, to which is added the 
cost of their transportation. Steam power and electricity 
have practically annihilated time and space. 

In more primative times, the greater part of subsistence 
was drawn from the same community, or, in fact, from the 
particular piece of land upon which an individual lived. 
But to-day, the laboring, as do all other classes, draw 
their supplies from the four quarters of the globe. Com- 
merce knows no political boundaries, unless artificially 
raised. As a rule, agriculture is most profitable in new 
countries, while in the centers of population, where capital 
has accumulated, the refinement of the raw material can 
be accomplished with less expense. Hence, England buys 
raw cotton abroad, manufactures, re-exports, and ex- 
changes it for food products that are obtained in Russia, 
the Indies, South America, or Dakota; and the cost is less 
than if that country was dependent on home production. 
In fact the subsistence of a considerable portion of the 
population of England is drawn from without her bound- 
aries, almost as absolutely as if they lived in another 
country. The close relation of distant parts of the globe 
is phenominal and modern. International commerce has 
become a veto upon civil war and strife between nations, 
more effective than all others. The facilities of transfer, 
and the systems of universal exchange, have created recip- 



:-28 RENT, WAGES AND CAPITAL. 

rocal needs, and equalized interests, and also prices. If 
distant points of the earth are being brought into closer, 
and still closer, relation, must not this equalizing and level- 
ing influence effect Rent in like manner? 

And Rents are thus effected. In England, the effects do 
not appear prominently on the surface. Suppose that 
country had to depend for the equivalent of its present 
large consumption, upon the domestic product, must not 
Rents have increased enormously? Such must have 
resulted from her increase of population; but while con- 
sumption must have increased immensely, Rents have 
increased little; if, indeed, they have increased at all. We 
•can judge of the amount of Rent by the comparative price 
of land products when they reach the consumer, and 
all production is from land. 

M. Leroy Beaulieu, a French economist, has endeavored 
to show that transportation has reduced Rent to insignifi- 
cance. Walker, in reply thereto, cites Sir James Caird as 
saying that on live meat the English producer has an 
advantage over his American competitor, equal to four 
pounds on an average ox; and that, "of this natural advan- 
tage nothing can deprive him ; and with this he may rest 
content." The same authority is quoted as saying that, 
"fresh meat from America, from the costly methods 
necessary to produce it, will, on an acre, cost equal to forty 
shillings ($12.00) for transport to this country. " Upon 
this authority Walker relies to prove Beaulieu "hopelessly 
in the wrong." 

Now what are the facts? By a recent method of 
refrigeration, dressed beef from America has been trans- 



RENT, WAGES AND CAPITAL. 2^ 

ported and sold in Liverpool at less than the cost of its 
production in England. The English producer of whose 
natural advantage, Caird says, "nothing can deprive him," 
now cries lustily for State interference and protection — 
free trade predictions to the contrary notwithstanding. 
The advantage of four pounds to the average ox vanishes 
at a single advance of the methods of transportation, and 
the refrigerating process, as also the transport of live 
animals, has scarcely passed the experimental stage. 

Walker quotes the same writer as saying, that the cost 
of transportation of cereal and other vegetable crops from 
California, the Black Sea, and India, "is seldom less, and 
often more, than forty shillings" on the produce of an 
acre; and adds "forty shillings ($12.00) an acre is a very 
pretty Rent, neither to be despised by the landlord, nor to 
be neglected by the economist in discussing the distribution 
of Wealth." I lay down the book containing these state- 
ments, and take up a Chicago paper of the date of this 
writing — the latter part of the year, 1885 — and find the 
following: — "On 'change in this city last Saturday dis- 
patches were claimed to have been received from London 
stating that October and November deliveries of Indian 
wheat were at 31 shillings the quarter," which is about 
85 cents per bushel, or within five cents of the price of No. 
2 spring wheat in Chicago. If this is true, and there 
seems to be no reason to doubt it,, it is one of the most im- 
portant announcements in its bearing on our trade that 
has been made in many a day. 

Accepting Caird as authority, Walker continues, "It is 
true that during the five years since Sir James Caird wrote 



30 RENT, WAGES AND CAPITAL. 

these words, the increasing severity of American competi- 
tion has very considerably reduced the rental value of the 
Lands in the United Kingdom ; but there is no reason to 
suppose that this effect has proceeded far enough to 
neutralize the gain of the twenty years preceding, not- 
withstanding all those improvements in the means and 
agencies of transport and intercommunication upon which 
M. Leroy Beaulieu dwells with so much emphasis and 
eloquence." 

Scarcely seven years have passed, and the difference in 
the price of wheat between London and Chicago — five 
cents per bushel — instead of being $12.00 per acre is not 
more than $1.00; and London is a center of population, and 
among the farthest from the great grain growing districts. 
Chicago is, comparatively speaking, on the margin of cul- 
tivation, where, as Mr. Walker and Mr. George both admit, 
Rents are only nominal. After the English agriculturist 
pays the cost of production, including the interest on 
Capital, and receives only five cents more than the price 
per bushel near the margin of cultivation, where the rental 
is inconsiderable, what possible amount can there be left 
for Rent proper ? 

Walker certainly makes a weak argument when he 
admits that five years of competition has " very considerably 
reduced" English rentals. That period of time contains 
but a small portion of the progress of the ages, and if so 
much is effected in that time, there is a great reason to 
suppose that that, which has been held to be a great 
advantage may be entirely overcome. Some Continental 
countries seek to prevent the importation of American 



RENT, WAGES AND CAPITAL. 3 1 

pork, upon the pretext that it is diseased, but this is known 
to be only a thin covering for the real cause, that their 
agriculturists are unable, longer, to compete, notwithstand- 
ing the long distance of transport. 

Walker further says, that, "the Capital Wealth of the 
owners of landed property has increased, in Great Britain 
and Ireland, by £331,000,000 in 20 years, at a cost to them 
which probably has not exceeded £60,000,000." This 
statement is also made upon the authority of Caird; but 
we are not told whether this increase of " Capital Wealth" 
represents the increase in the value of lands, only, or 
whether it represents the " Capital Wealth " accumulated 
from all sources. For the support of the dignity of the 
patented and trade-marked nobility, great wealth is neces- 
sary, and to secure it, " shop " is no longer despised. 
Much of the wealth of all classes in England has been 
accumulated in the field of trade, and by enterprise in the 
four quarters of the globe. 

But the inference seems to be, that the increase is in the 
price of land only, although the term " Capital Wealth " 
scarcely allows it. It is implied that this increase in the 
price of land — if such it is — is due mainly to the greater 
profits in agriculture; or, which is the same the increase of 
actual Rent. Now it does not follow that this increase of 
price results from an increase of Rent, or that Rent must 
increase in the same proportion, or, in fact, that it must 
increase at all, except nominally, to pay the interest on 
additional Capital invested in agricultural improvements. 

The increasing Capital Wealth of England has resulted 
in the gradual reduction of the rate of interest, and an 



32 RENT, WAGES AND CAPITAL. 

increased demand for opportunities of investment; this 
results in an increase of the price of land, but does not 
necessarily increase annual Rents. In a country of exten- 
sive commercial relations, and universal enterprise, such 
as England, there is a steadily increasing number of 
wealthy men who desire to retire from active business life 
and invest their Capital in some permanent and safe place. 
These turn naturally to land, and the effect must be 
higher prices, although the product is not more valuable, 
or in greater demand. Recent years have demonstrated 
the profitableness of investing Capital in improvements on 
land in the shape of fertilizers and such other improve- 
ments as will increase the yield; this will raise the price of 
land in a much greater proportion than the rate of interest. 
It is natural with men to desire the possession of land — 
to have an estate. The idea of a home, which almost 
every intelligent being desires, cannot be held, separate 
from land. Furthermore, the possession of land is, in 
England, associated with rank and social distinction, in fact 
it is in some degree the foundation of rank. It is clear 
then that there are great incentives to the purchase of 
land, other than financial considerations, and the effect 
may be an increase in the price of land, even in the face 
of a declining rate of Rent, especially when there is a 
strong national or home feeling. When an Englishman 
desires to build up an estate, and establish a home, the 
purchase of land on the prairies of North America would 
not be considered as contributing to that end. His purpose 
is accomplished, only, by the purchase of land in his own 
country; consequently the lands in other portions of the 



33 

world, are not, for this purpose, in competition with that 
in his own; at the same time, however, the products of 
land in all nations, almost, are in full competition with that 
in his own. Here, then, are two influences, the one oper- 
ating forcibly to raise the selling price of land, the other, 
with even greater force, to lessen the rate of Rent. 

The modern facilities of intercourse between distant 
points and between the different nations and races of men, 
must have an equalizing effect upon the conditions under 
which they live, and especially in matters of price and 
value. It is not assumed, however, that the facilities of 
exchange are, in themselves, sufficient to overcome Rent. 
Economic Rent may be equal to the cost of transportation 
from the margin of cultivation, where Rents are only 
nominal; they cannot be more, they may be less. 

But the condition that most effects Rent, to lessen it, is 
the diminishing productiveness of land. It is known to 
every one, that its greatest natural productiveness is when 
it is first reclaimed, and put under cultivation; but land 
can be new only once, and with continued cultivation the 
natural fertility is quickly exhausted. It must be raised, 
and renewed, and kept in a condition that will insure a 
profitable return, by artificial means — that is to say, by the 
expenditure of Capital in improvements, by the use of 
fertilizers, by ditching, by irrigation, and other means. 
The increased productiveness arising from these, or other 
improvements, goes, of course, to the repayment of 
Capital and the interest thereon and adds only in a limited 
degree to Rent proper. 

It is not an over estimate to say, that land, the first 

3 



34 RENT, WAGES AND CAPITAL. 

productive power of which is 20, will be by continued 
cultivation, reduced to 10, or even 5, provided the amount 
of the product is not kept up by the outlay of labor and 
Capital. On the margin of cultivation where Rent does 
not exist, and in new countries where it is very low, the 
amount of the product will be the maximum, which 
we have placed at 20; in old countries the amount 
of the product on unaided land will be the mini- 
mum, 10. Now it is evident that the difference in the 
amount of the product between the old and the new 
country, which is 10, will pay for the transport, and there 
will be still 10 remaining, which goes to the payment of 
labor and the replacement of Capital, Rent being only 
nominal. If the land owner in the older countries should 
attempt to exact any considerable sum for Rent, the reply 
will be " No, I will not pay it, because the product of 
your land is only 10, and I can have as much on the 
margin of cultivation, and no Rent to pay." The figures 
used here are only for convenience in illustration; I have, 
undoubtedly, overestimated the cost of transportation, as 
also, the product of long used lands, upon which Capital 
has not been expended to maintain the yield. 

But, to the above Mr. George is ready to answer, and 
his argument is so entirely unique that I quote at some 
length, marking in italics the gist of it: "For, that man 
cannot exhaust or lessen the powers of nature follows from 
this indestructibility of matter and the persistence of force. 
Production and consumption are only relative terms. 
Speaking absolutely, man neither produces nor consumes. 
The whole human race, were they to labor to infinity, could 



RENT, WAGES AND CAPITAL. 35 

not make this rolling sphere one atom heavier or one atom 
lighter, could not add to or diminish by one iota the sum 
of the forces whose everlasting circle produces all motion 
and sustains all life. As the water that zue take from the 
ocean must again return to the ocean, so the food we take 
from the reservoiors of nature is, from the moment we take 
it, on its way back to those reservoirs. What we draw 
from a limited extent of land may temporarilly reduce the 
productiveness of that land, because the return may be to 
other land, or -perhaps, all land; but this possibility lessens 
zvith increasing area, and ceases when the whole globe is 
considered. * * * * * * * Life does not use up the 
forces that maintain life. We come into the material 
universe bringing nothing; we take nothing away when 
we depart. The human being, physically considered, is 
but a transient form of matter, a changing mode of motion. 
The matter remains and the force persists. Nothing is 
lessened, nothing is weakened. And from this it follows 
that the limit to the population of the globe can only be 
the limit of space." 

A very little observation must convince anyone that this 
argument is insufficient. It is simply saying that the fer- 
tility of the soil will recuperate by natural process — that 
substance taken from the soil will return again and restore 
the native fertility; but who does not know that the return 
of the scattered elements is a very slow process? The 
rate of return is far beneath that by which it is taken there- 
from with steady cultivation. It is the fact that the natural 
process is entirely inadequate that makes artificial fertiliz- 



36 RENT, WAGES AND CAPITAL. 

ing necessary. There is on all sides abundant evidence 
that places this matter beyond dispute. 

A convincing illustration of the insufficiency of the above 
mentioned method we have in the agricultural system of 
Virginia before the late Civil War. The practice there 
was to cultivate a body of land for a number of years in 
succession, or, until its fertility was about exhausted and 
then repeat the same process on other land, leaving the 
first to renew itself by the methods of nature. But little 
attempt was ever made to restore the productiveness of 
the soil by the expenditure of Capital or Labor. The 
result of this method was to impoverish lands that were, 
originally, of surpassing fertility. This result may have 
been hastened by the cultivation of tobacco, but it must 
have come under any circumstances with such a system. 
This routine of agriculture held in Virginia for a long 
time. James Parton, in his life of Thomas Jefferson, gives 
us an interesting sketch, from which I clip the following: 
"The usual routine was this: When the forest was first 
cleared, laying bare the rich, deep, black, Virginia soil, the 
slow accumulation of ages of growth and decay, tobacco 
was grown for five successive years. That broke the 
heart of the land, and it was allowed to rest awhile. Then 
tobacco was raised again, until the crop ceased to be re- 
munerative; and then the fields were abandoned to the 
crops sown by the methods of nature; and she made haste 
to cover up with a growth of evergreens the outraged 
nakedness of the soil. But Jefferson had, long before, 
abandoned the culture of the exacting weed on the Alber- 
marle estate. His overseers, therefore, had another 



RENT, WAGES AND CAPITAL. 37 

rotation, which exhausted the soil more completely, if less 
rapidly. They sowed wheat in the virgin soil among the 
stumps; next year, corn; then wheat again; then corn 
again; and maintained this rotation as long as they could 
gather a harvest of five bushels of wheat or ten bushels of 
corn to the acre; after which Nature was permitted to 
have her way with the soil again, and new lands were 
cleared for spoliation." Ten bushels of corn to the acre! 
Tell it not in the "Great West! " 

But while the last crop was only five bushels of wheat, 
the first may have been considerable more, perhaps ten 
bushels, and dividing this with five the product of the last, 
we have an average of only seven and one-half bushels. 
But while this small average was being produced from an 
acre, there were opposed to it, tw 7 o, three, or four acres that 
produced nothing, having been exhausted and left to 
renew r themselves by Mr. George's process of nature. In 
an economic estimate the product of an acre in use must 
be averaged with every acre that at the same time is held 
out of use, because its productiveness has been exhausted, 
and hence, with the old Virginia methods there would 
have been, instead of seven and one-half bushels, an aver- 
age of only one-third or one-fourth of that amount. 

But it may be allowed, that, at that time and place the 
modes of agriculture were crude, and the people unpro- 
gressive — although Jefferson himself was an innovater and 
ahead of his fellows — and that upon land of the same 
fertility, there might have been, with better methods, an 
average of, we will say, double the amount; that is, with 
better plowing, better sowing, better implements, with a 



38 RENT, WAGES AND CAPITAL. 

judicious rotation of crops, there might have been, without 
fertilizing, or an additional outlay of Capital, a much 
greater average. With improved methods and better 
management the original virtues of the soil may be retain- 
ed for a much longer period, but eventually, there will be 
arrived at a condition similar to that of Old Virginia. 

Does any one suppose that England, or New England, 
would yield a greater average under continued cultivation, 
if the voluntary return of the elements to the soil was alone 
depended upon? You may say that the average named 
above is too low, but you may raise it considerable and 
still there is no margin for Rent. I must remind the 
reader, at the risk of repetition, that actual Rent must be 
based upon the native force of the soil, and as unaided land 
in new countries, where Rent is an unimportant factor, 
yields a much larger product, the effect must be to make 
Rent in the older countries disappear and more than disap- 
pear, only as it is protected by the cost of transportation. 

If further illustration is necessary, we have it in a 
comparison of the agricultural systems of England and 
Ireland. In the latter country the native qualities of the 
soil were as good as those in the former ; but in Ireland, as in 
Virginia, nature is left to effect a renewal of the land, although 
for different reasons. The difference in the agricultural 
products of the two countries fairly illustrates how much 
of England's product is due to Capital and Labor expend- 
ed. But some may suppose that the illustration makes 
Rent certain, because the poor and exhausted lands of 
Ireland pay an exacting Rent; but the Rents of Ireland 
are burdensome because there is so little to pay them with. 



RENT, WAGES AND CAPITAL. 39 

The condition of the Irish people does not arise in the 
natural operation of economic laws. Theirs is a social 
status arising from outside and arbitrary interference, that 
began with confiscation, and has run through the genera- 
tions subject to the influences that always debase a sub- 
jected people. The government policy that rules [reland, 
and all countries similarly situated, practically places her 
outside the pale of economic laws; the writer must, of 
necessity, formulate a new set of theories for all such. 

H. C. Cary affirms that Rent disappears entirely 
because few farms will sell for the cost of producing them 
— that is to say, they will not sell for as much as will 
replace the Capital, with the interest thereon, that has 
been expended to improve them. Walker, with eager- 
ness to overthrow Cary's argument, makes haste to say 
that the object of the expenditure of Capital on land is not 
to secure its return, with interest, in an ultimate sale of the 
land, but that repayment is expected, in great part, from 
the increase of the annual crop. Walker is nearer right; 
the agriculturalist does expect to be repaid by the increase 
of the annual product, or by some saving of labor that an 
improvement will bring; but where is the difference in the 
effect upon Rent? Cary accounts the Labor and Capital 
expended in improvements, against the selling price of the 
land, which is nothing more than Capitalized Rent. 
Walker accounts it against the annual product or annual 
Rent. In either case the deduction must be from Rent. 

Walker thus states it: "That this proposition is correct 
is, I think, proved conclusively by the fact that there are 
few classes of improvements known to agriculture which 



40 RENT, WAGES ANCE CAPITAL. 

a tenant for 33 years will not make at his own expense, 
notwithstanding the certainty that he will cease to enjoy 
the benefits of them at the expiration of his lease. Even a 
much shorter period of enjoyment, as 21 years; or as so 
common in Scotland, 19 years, may give the tenant time 
enough to get back the value of the most expensive im- 
provements, if judiciously made. 

Capital is, in fact, e\en in its most durable forms, rapidly 
consumed. If production was to cease absolutely the 
visible effects of human labor would disappear with sur- 
prising rapidity. Capital must be constantly renewed and 
replaced. Now it is very evident that the more rapid is 
the consumption of Capital the greater must be the 
percentage of the annual product necessary to replace it, 
and the amount that remains and from which Rent must 
be paid, is small in the same proportion. When, therefore, 
Walker calls to witness the short period in which Capital 
is replaced he makes an argument against Rent. 

But further, Walker does not state one of the principal 
elements that enter into a lease or sale of land to effect the 
price of it. He states that extensive improvements will 
be made upon a lease for years with a full knowledge that 
improvements and all must be surrendered at the expira- 
tion of the term ; and the inference is that the sum paid to 
the owner of the bare land, upon which the improvements 
may be made, is a contribution made wholly to Rent. This 
is entirely a mistake, for in some instances, at least, not a 
particle of this nominal Rent is for natural forces of the 
land. In illustration we shall say that an individual owns 
an acre of land, entirely unimproved, in the heart of a 



RENT, WAGES AND CAPITAL. 41 

great city; for this he can obtain a very large sum, either 
to sell or lease it. Many of the economists assume that, 
there being no improvements, this sum is for Rent abso- 
lute, but what the owner actually sells, or leases, is not the 
native force or utility of the land, but the commercial 
advantages arising from its surroundings; its value springs 
not from within, but from without; it arises from the 
millions of Capital invested around it — from the thousands 
of a population, from the public improvements, from the 
theatres, churches, and schools, from the paved and lighted 
streets, from the railroads that center around it. The 
actual or intrinsic qualities of the land are scarcely consid- 
ered, those who desire to buy or lease it consider only the 
surroundings. 

Mr. George strikes the same rock. He dwells upon the 
large price that the owners of land in the cities can com- 
mand and estimates it as Rent entire. And yet he 
recognizes the truth at another point in his argument, but 
fails to make it apply all around. He proposes to confis- 
cate improvements when they become inseparable from 
land, and in justification of that proposition, endeavors to 
show that they derive much of their value from the com- 
munity, and from their surroundings, and hence may be 
appropriated. But, when he comes to lands in the cities 
he seems to forget that they also derive most of their value 
from Capital expended in their vicinity, and that it is not 
the natural forces of the lands that are sold. To this part 
of his argument I shall refer again. 

The man who holds land out of use, especially in towns 
and cities, is not considered a public spirited man, or a 



42 RENT, WAGES AND CAPITAL. 

benefit to the community; but the complaint is not that he 
derives a benefit direct from the land which he holds, but 
that he profits by the active Capital and Labor of those 
about him, while he remains inactive, and employs neither 
Capital or Labor by which the community is benefitted in 
return. The man who thus holds land, if he drew his 
profit from the increase of its native power, could not be 
reproached by the community, because his profit would 
not be drawn from public progress. It is because his 
wealth is increased by public enterprise and advancement, 
to which he has contributed nothing, that makes him a 
parasite in the eyes of the people. 

I have, as much as possible, allowed the argument to 
take its natural course, and as a result we have seen Rent 
almost disappear. Following the logical course indicated 
by the above, will, at the next stage, partially restore Rent 
as a factor in distribution and bring it nearer its true 
position ; but it does not still become an established portion, 
because in the complication of human affairs many influ- 
ences and conditions arise that unsettle the best proven 
theories. 

We have seen that the original fertility of the soil is soon 
exhausted and that the processes of nature are much too 
slow to enable it to recover, while under cultivation, and 
hence the soil becomes dependent to a great extent upon 
the expenditure of Labor and Capital to restore its fertility, 
and this being true, the principal part of the product must 
go to the payment of Wages and the interest on Capital ; 
this I have repeated at the risk of repetition. 

Where, then, does Rent arise ? Principally upon the 



RENT, WAGES AND CAPITAL. 43 

susceptibility of land to improvement. Land varies in its 
composition. There is some, that with a determined 
amount of improvement, or fertilizing, will yield an addi- 
tional product greater than some other equally improved, 
but differently composed or situated; as, for instance, in 
the use of lime as a fertilizer its effects are more marked 
upon some lands than upon others. Some soils have more 
staying qualities than some others, and hence artificial 
raising will last longer; low lands are different in this 
respect from those upon hills. A limestone is. different from 
a gravel soil. It is in these differences that Rent princi- 
pally arises. 

But Rent is also, in part, determined by the availability 
of means of improvement or renewal of the soil. If fertili- 
zers and other means of improvement are near by so that 
they may be brought to bear at small expense, that is a 
natural advantage that adds to Rent; if these materials are 
remote the cost must be greater and less is left for Rent. 

The gain of Rent, however, from these causes is not 
great. With an equal expenditure of Labor and Capital the 
amount of the product of the different grades of land are 
brought nearer together. Now, it is held that Rent rises 
in the difference in the productiveness of land, and hence, 
if improvements have a tendency to equalize products, they 
operate against the very foundation of Rent. It may be 
said, that whatever the difference in the susceptibility of 
land to improvement, it will not effect the difference in ex- 
change values by which Rent is greatly supported ; but it 
must be remembered that the difference in exchange 



44 RENT, WAGES AND CAPITAL. 

value in modern times is not marked except it be on long 
distances. 

Rent may be augmented by the increase of the product 
above the cost of the improvement. The cost of an im- 
provement may be 5 but the increase may be 6, the differ- 
ence may go to Rent, although it is not incumbent that it 
should always do so. The limestone is imbeded in a 
quary, a poor soil is on the hill; there are present in each, 
elements, that, if brought together, would enlarge the pro- 
duct of the soil. The Labor and Capital necessary to bring 
these together must first be repaid at the current rates of 
Wages and interest. If there is any surplus it goes to Rent, 
other conditions permitting. 

And this is the whole of the law of Rent. Under these 
conditions it arises, when it arises at all. Local and tem- 
porary causes may sometimes, seem to give rise to more 
Rent, but these do not count in an economic estimate. 
Mr. George, realizing, no doubt, that the current doctrine 
of Rent does not show a sufficient amount to support his 
preconceived ideas relative thereto, refers to Rent all the 
increase of the product resulting from an increase of popu- 
lation and the settlement of the country. Of this I shall 
speak again. 



RENT, WAGES AND CAPITAL. 45, 



CHAPTER III. 



Mr. George sees Rent in every thing, and every availa- 
ble circumstance, and some that are scarcely available, are 
made to fashion themselves to the magnifying of Rent. 
But at no point in his arguments does he place himself 
more in opposition to facts, as well as to correct theories, 
than when he enters into a discussion of the effects of labor- 
saving machinery and improvement in the Arts. He says 
in substance, that, with private ownership of land, all the 
benefits of these improvements go to the landlord in the 
shape of Rent. His statement is as follows: 

"And so, every improvement or invention, no matter 
what it be, which gives to labor the power of producing 
more wealth causes an increased demand for land and its 
direct products and thus tends to force down the margin 
of cultivation, just as would the demand caused by an in- 
crease of population. This being the case, every labor- 
saving invention, whether it be a steam plow, a telegraph, 
an improved process of smelting ores, a perfecting printing 
press, or a sewing machine, has the tendency to increase 
Rent. * * * * * * * 

"If invention and improvement still gt> on, the efficiency 
of labor will still be further increased, and the amount of 
Labor and Capital necessary to produce a given result fur- 



46 RENT, WAGES AND CAPITAL. 

ther diminished. The same causes will lead to the utiliza- 
tion of this new gain in productive power for the production 
of more wealth; the margin of cultivation will be again 
extended, and Rent will increase, both in proportion and in 
amount, without any increase in Wages and interest. And, 
so, as invention and improvement go on, constantly adding 
to the efficiency of labor, the margin of production will be 
pushed lower and lower, and Rent constantly increase, 
though population should remain stationary. 

"And, as we can assign no limits to the progress of 
invention, neither can we assign any limits to the increase 
of Rent, short of the whole produce." 

The reader must make some fine distinctions if he can 
harmonize the several statements of Mr. George. When 
he discusses population he says there can be no press upon 
subsistence, because an increase cf population increases 
productive capacity just as do improvements in the Arts and 
labor saving machinery, and that improvement in produc- 
tive power has the same effect as increasing the produc- 
tiveness of land; if this means anything, it means that 
improvements in the Arts increase the aggregate of human 
production without extending the margin of cultivation, 
for, otherwise — as he asserts — population would press 
upon subsistence. But in the present statement he gives 
us to distinctly understand that any increase consequent 
upon improvements extends the margin in the same pro- 
portion, that it is pushed "lower and lower and Rent 
constantly increases, though population should remain 
stationary." 

It seems incredible that a man of Mr. George's sagacity 



RENT, WAGES AND CAPITAL. 47 

should thus entangle himself in contradictions; it can only 
be accounted for by his eagerness to lay upon Rent about 
all the wrongs of the present social state. 

The tendency of improvements may be to increase Rent, 
that is, if there is a scarcity of land or natural forces, 
but such an increase is not in proportion to the increase of 
the product. Labor, as it increases in efficiency, has a 
twofold effect upon production, one being to increase the 
amount of the product, and the other to increase the quality, 
neatness, and finish. The first may increase Rent, the 
latter does not. It is said that desire has no limit, but this 
is scarcely true as to quantity; we can imagine a limit to 
the amount, either of food or clothing that any one may 
desire to consume. Every one desires an abundant sup- 
ply, but beyond a varying limit desire takes the direction 
of elegance and finish; beyond a certain sufficient supply 
consumption is that of the epicure rather than that of the 
gourmand. The care, labor, and expense of the rich man's 
dinner is not in the amount of it, but rather in the quality — 
the cooking and serving. The remarks made in the first 
chapter with reference to the efficiency of labor will apply 
here. 

Undoubtedly, then, beyond a certain point, the efficiency 
of labor expends itself in the refining of the product rather 
than increasing the amount of it, and labor thus expended 
increases wealth but does not increase the demand for land, 
and, consequently does not add to Rent. It is certain, that, 
with improvements and inventions that increase productive 
power the percentage of labor expended in creating articles 
of luxury will be increased. It is certain, that, with an 



48 RENT, WAGES AND CAPITAL. 

increase of wealth a large percentage of labor is expended 
in producing works of Art — in building monuments and 
painting tine pictures — in building fine houses, making fine 
furniture, providing fine clothing, or beautifying sur- 
roundings. The more elegant and finely wrought an 
article the greater must be the percentage of labor repre- 
sented in it and the less the percentage of land. With the 
increase of wealth more pianos are used, the amount of 
land necessary to produce the materials used to make a 
piano is not large, but in its construction much labor and 
skill is expended, and an instrument of much value is pro- 
duced. Nothing has yet been produced so elegant and 
grand, or exquisitely finished that still greater results are 
not aimed at, the effect of this must be to still further 
increase the percentage of labor in production and reduce 
the percentage of land, and thus the tendency is to reduce 
Rent as a proportion. With further invention and increase 
of wealth this proportion becomes greater and greater, and 
Labor and Capital is the gainer. 

I shall not enter into the details to enumerate the effects 
in the different industries. The advances made in the 
methods of transportation are the most prominent in reduc- 
ing Rent, but these have been noticed in the second chapter. 
Leroy Beauleiu, as we have seen, makes Rent disappear 
entirely and if he is to have credit for recognizing at least 
part of the truth, Mr. George's claims are considerably 
reduced. 

At this point we find Mr. George making an argument 
that involves a positive contradiction of terms. He says: 
"Poverty deepens as wealth increases, and Wages are 



RENT, WAGES AND CAPITAL. 49 

forced down while productive power grows." This is 
simply saying that production increases while consumption 
decreases, for if the Wages of labor are forced down, con- 
sumption is reduced in the same proportion. This is 
almost an impossible condition. What is the object of 
production except to consume? And if consumption 
decreases what becomes of the steadily increasing product? 
Consumed by the rich do you say? The rich consume no 
more as a proportion than they did in earlier times ; in fact, 
with the present efficiency of labor less human effort is 
necessary to supply a rich man's wants and demands than 
before. The number of the rich may have increased but 
they no longer retain long trains of servants and attend- 
ants, and a less percentage of the aggregate of labor is 
necessary to supply their wants. 

Who then consume the increased and increasing product 
of labor? Evidently it is consumed by the laboring masses 
— by those who produce it. Pre-eminently the machines 
work for the common people. Who consume the immense 
products of our cotton and woolen factories? Who wear 
the millions of pairs of machine made boots and shoes? 
Who consume the gigantic crops of wheat, corn, sugar, 
coffee and tobacco? Who, but the laboring classes that 
are employed in their production? 

That the common people are the principal consumers of 
machine made goods we know from the fact that there is 
a wide spread prejudice on the part of the rich against this 
class of goods ; to wear them is not fashionable in many 
circles. The boots that a rich man wears are usually 
hand-made; while those on the feet of the laborer are made 



50 RENT, WAGES AND CAPITAL. 

in a factory, where a thousand or more pairs of the same 
kind are produced in a day. The rich man's son has his 
clothing made at a fashionable tailor's; a laborer buys a 
suit from a dealer in ready made goods. The rich man's 
wife wears a robe made by the hand of a skilled seam- 
stress; the clothing of the laboring man's wife is made 
upon the sewing machine now of universal use. A prin- 
cess wears rare point lace, laboriously wrought by hand, 
a women of the common people wears some unpretentious 
machine made finery. The statuary in the halls of the 
millionaire has been laboriously wrought by a master 
hand; the unambitious plaster cherub in the laborer's 
dwelling has common fellowship with many others cast in 
the same mould. The fine paintings on palace walls are 
the studied efforts of artistic minds: the chromo in the 
poor man's cottage is literally machine made. 

I repeat it, then, that machinery works for the workers 
and labor is greatly benefited. It cannot be said in reply 
that it is the rich that consume the increased product, 
consequent upon the improvements in the Arts, because, 
as we have seen, the consumption of the rich takes the 
direction of finely finished goods, or, so, at least, does that 
portion of it beyond the necessaries of living. The pro- 
ducts of machinery are, for the most part, of common 
grades of material and having a great sameness of style, 
such, in fact, as are usually of common use. 

We see then, that Mr. George's theories become a two- 
edged sword to reduce Rent, as a proportion, when he 
says that machinery reduces Wages; that is to say, that 
the consumption of the laborer is reduced in the same pro- 



RENT, WAGES AND CAPITAL. 5 1 

portion, and as that consumption is of necessaries requiring 
the largest amount of land to produce, the effect must be 
to lessen the demand for land and thus reduce Rent. At 
the same time the supposed increased consumption of the 
rich, taking the direction of finely finished goods, requiring 
the largest amount of labor to produce, must still further 
reduce Rent as a proportion. 

Machinery and improvements are beneficial to labor, 
because they increase the effectiveness of Capital — that is, 
they have the same effect as increasing the amount of it; 
the amount that may be produced with a given amount of 
Capital is greater with modern and improved methods. 
And not only the effectiveness, but also, the volume of 
Capital is increased by improvements in the Arts. With 
greater and increasing effectiveness of Labor and Capital 
the accumulation, both of Wealth and Capital, becomes 
more easy. When, with primitive methods and imple- 
ments of labor, the greatest product was only sufficient to 
provide the necessaries of life, the accumulation and, con- 
sequently, the amount of Capital, must have been small, 
and interest, or the return to Capital correspondingly high. 
But at the present, when it is possible to produce an abun- 
dance of the necessaries and many of the luxuries of life, 
it becomes easy, with abstinence that causes no suffering, 
to accumulate Capital. 

Mr. George assumes that although Capital loses, Labor 
gains nothing, and Rent gets all; of the truth of this 
the foregoing will show. He also assumes to reduce 
Capital to insignificance as a factor in production, but of 
this I shall speak in another chapter. 



52 RENT, WAGES AND CAPITAL. 

From "Progress and Poverty" I again quote: "As 
has been before said in the improvements which advance 
Rent, are not only to be included the improvements which 
directly increase productive power, but also such improve- 
ments in government, manners, and morals as indirectly 
increase it. * * * * * * And if 

the corrupt governments of our great American cities were 
to be made models of purity and economy, the effect 
would simply be to increase the value of real estate, not to 
raise either Wages or interest." 

There is nothing in this that demands serious considera- 
tion; I only introduce it here as an example of the 
extravagant utterences that abound in that book. Even 
improvements in manners, morals and customs are held to 
increase only Rent, and good government benefits only 
land-holders! Mr. George's discoveries are, some of them, 
like that of the astronomer who thought he had discovered 
a monster on the sum, but who, upon examination, found 
the monster to be only a fly on the object glass of his 
telescope ! 

But, aside from all these these theories, we have before 
us the demonstration of the fact that improvements and 
machinery are a benefit to all classes, and to the laboring 
no less than any other. In countries where improvement 
and invention have made the most progress, where 
machinery is in the most general use, and where wealth 
accumulates the most rapidly, it is there that Wages are 
the highest, it is there that laborers are the best educated, 
the most intelligent, the most independent and enjoy most 
of the benefits of life. For example, compare Russia, 



RENT, WAGES AND CAPITAL. 53 

Spain, or Mexico with England, Germany, France, or the 
United States. Is not the condition of the common people 
infinitely better in the last named countries? Are they 
not better educated, and more intelligent? And why, if 
not because they share in the advances made in wealth and 
invention? Why, if not because they are partakers of the 
material progress of their age and countries? 

But it is positively asserted that poverty increases with 
advancing wealth and improvement in the Arts: if this were 
true, then the general condition of the laboring classes 
would be better in Mexico than in the United States, 
better in Ireland than in England; better in Spain than in 
France or Germany. I deny all that "Progress and 
Poverty" says on this part of the subject and assert that 
the condition of labor is better in countries of the greatest 
material progress. 

I may appropriately, in this connection, refer to specu- 
lation in land, to which Mr. George attaches great influ- 
ence in raising Rent. " Whether we formulate it as an 
extension of the margin of production, or as carrying the 
Rent line beyond the margin of production, the influence 
of speculation in land in increasing Rent is a great fact 
which cannot be ignored in any complete theory of the 
distribution of wealth in progressive countries." And 
again, " In such communities, the confident expectation of 
increased prices produces, to a greater or less extent, the 
effects of a combination among land-holders, and tends to 
the withholding of land from use, in expectation of higher 
prices; thus forcing the margin of cultivation further than 
required by the necessities of production." 



54 RENT, WAGES AND CAPITAL. 

There is not much in this that need detain us long. The 
holding of land on speculation, together with the with- 
holding of it from use, is entirely an exceptional holding, and 
no great influence can be attached to it. Only the unim- 
proved and unused land on the margin of cultivation, that 
may be held upon speculation, can increase Rent; and 
there only very little, for it is admitted on all sides, that 
there, the amount of Rent is only nominal. Very little 
land that is held on speculation is held out of use for that 
reason. Land, unlike the products thereof, may be used, 
and not consumed, and in settled portions of the country, 
land thus held is used as any other; this is universally true 
of agricultural lands. To hold land out of use upon 
which improvements have been made would result in the 
decay of the improvements and a loss of the interest, and 
is not to be thought of. In the cities some land ma}' be 
held out of use, but the percentage thus held is so small 
that the effect is scarcely perceptible. Moreover, the 
burden of municipal taxes is such that it is seldom prof- 
itable to withhold valuable land from use. 

Upon the margin of cultivation land is frequently held 
out of use, but not often from design. Many of the 
holders would gladly have their lands brought into use, if 
thereby they might realize only enough to pay the onerous 
taxes generally imposed; it is the practice in Western 
countries to tax heavily the unimproved property of non- 
residents. The possession of land on the frontier is not 
always a bonanza; witness, the many confiscations of land 
for unpaid taxes; and with the land may be lost the sum 
of the taxes that may have been paid for a series of years. 



RENT, WAGES AND CAPITAL. 55 

Speculation in land, as, indeed, speculation in any thing 
else, is not for the general good; but wherein this except- 
ional holding of land can have such an immense influence 
upon the economies is hard to discover. 



56 RENT, WAGES AN<J CAPITAL. 



CHAPTER IV, 



Does individual ownership of land constitute a monop- 
oly ? If, after many elaborate arguments to magnify Rent, 
Mr. George fails to prove that private ownership is a mo- 
nopoly, then his many schemes and propositions are 
entirely without force. The effects of such ownership are 
thus stated : " The recognition of individual proprietorship 
of land is the denial of the natural rights of other individ- 
uals — it is a wrong that must show itself in the inequitable 
division of wealth. For, as labor cannot produce without 
the use of land, the denial of the equal right to the use of 
land is necessarily the denial of the right of labor to its own 
produce. If one man can command the land upon which 
others must labor, he can appropriate the produce of their 
labor as the price of his permission to labor." 

The assumption here is, that the land-owner is an abso- 
lute monopolist, who can command the use of land, or the 
products thereof, at will. What constitutes a monopoly in 
any thing ? The first thing essential to a successful mo- 
nopoly is a not over abundant supply of the thing to be 
monopolized. In fact it is only when there is an actual scarcity 
of the amount available to meet the actual or probable de- 
mand. For a successful monopoly the conditions are about 
the same as those necessary to create a "corner," as that 



RENT, WAGES AND CAPITAL. 57 

term is known in speculative circles. If the supply exceeds 
the demand, or even equals it, the elements of successful 
monopoly are not present. 

The thing sought to be monopolized is in competition 
with itself. For instance, if the demand for a certain art- 
icle is ioo and the supply 150, the 50 not in demand comes 
in competition with the 100 that is in demand and reduces 
the value of the whole amount, notwithstanding the entire 
amount may belong to, or be controlled by, a single indi- 
vidual or combination. 

Monopoly in land is averted upon exactly similar condi- 
tions. The amount of land available for use, and the 
power of natural forces are much greater than those 
necessary to subsist the population of the globe. And the 
land available is susceptible of much greater productive- 
ness than present human force and ingenuity can make it 
produce. Of this Mr. George himself says: " Now this 
limitation of space — this danger that the human race may 
increase beyond the possibility of finding elbow room — is 
so far off as to have no more practical interest than the 
recurrence of the glacial period or the final extinguish- 
ment of the sun." 

The candid reader must say that this declaration invali- 
dates the whole theory of monopoly in land. Certainty if 
the capacity of land, as he asserts, is many times greater 
than the demand of the present population upon it, then 
the competition of land with land must prevent successful 
monopoly, especially when the holders are numbered by 
thousands and even millions; and more especially if Mr. 
George's idea is correct that the increase of population and 



58 RENT, WAGES AND CAPITAL. 

improvement in the Arts have the same effect as increasing 
the productiveness of the soil. 

As I have just intimated, the thing next in importance to 
a limited amount of that which is to be " cornered " is a 
small number of those who are, or endeavor to be, 
monopolists. Monopoly can only be maintained by co-op- 
eration, and co-operation can with difficulty be made 
successful where there is a large and miscellaneous 
number of holders. The number of land-holders is 
greater than the number of persons engaged in any of the 
industrial pursuits. And more, they are necessarily scat- 
tered over the entire globe ; there are no centers of 
agriculture, as there are centers of business, or centers of 
manufacture, or places where Capital accumulates or 
capitalists gather. Agriculture being diffused of necessity, 
combination is not easy. Capital concentrates with indi- 
viduals, as well as in places, and hence, other circumstances 
being equal, combination is easy. 

When the supply is less than the demand the effect may 
be the same as that resulting from combination ; when, 
however, the supply exceeds the demand, to make a suc- 
cessful " corner " is scarcely possible, even with thorough 
organization. If, as asserted in " Progress and Poverty," 
the earth can support a thousand billions as easy as a 
thousand millions, combination becomes practically impos- 
sible, even if the number of land-holders was limited to a 
very few, which it is not. 

Speaking of the population of the United States he says: 
" There is no question about the ability of the United 
States to support such a population and many hundreds 



RENT, WAGES AND CAPITAL. 59 

of millions more ; and under proper social adjustments, to 
support them in increased comfort." Surely, if our own 
country is able to support many times its present popula- 
tion; and land from which all must be supported, is the 
property of many thousands of individuals, who have no 
organization against all other classes, then the elements of 
monopoly are not present. 

It will not have escaped the observation of the reader 
that a great majority of land-holders could not, if they 
desired, arbritrarily withhold land from use for the purpose 
of exacting Rent, for the reason, that they are themselves 
dependent upon the current or annual crop. The percent- 
age of agriculturists who could not, without embarrass- 
ment, lose the sale of the crops of a single season, is very 
large. If the cream of the labor of all classes goes to the 
landlord in the shape of Rent, then they may refuse 
subsistence to non-holders as their fancy may dictate; but 
the hard facts in the case do not support any such theories. 
Of the condition of the agriculturalist Mr. George has this 
to say: "The life of the average farmer is now unneces- 
sarily dreary. He is not only compelled to work early 
and late, but he is cut off by the sparceness of population 
from the conveniences, the amusements, the educational 
facilities, and the social and the intellectual opportunities 
that come with the closer contact of man with man." 
Evidently this is not the condition of a class that constitutes 
the greatest of all monopolies. To work early and late is 
not the condition of those who, as is assumed, may com- 
mand the very existence of their fellows. Yet, this is 
undoubtedly the condition of the average farmer, and it is 



60 RENT, WAGES AND CAPITAL. 

scarcely necessary to add that such a holding of land is no 
monopoly. 

We are further told that land is concentrative — that the 
holdings are becoming larger. This is in reference to 
lands in the United States. If the reader will make 
observations in the older portions of the country he will 
find the opposite to be true. With our laws, equally 
dividing estates, an increase of the size of holdings can 
scarcely ensue. The testamentary division of estates, as 
a rule, follows the law, and hence an equal division among 
heirs ; this sooner or later must result in small holdings. 

That this is the tendency, where estates are not entailed, 
is shown clearly in some portions of Europe. The hold- 
ings in some places have become so small that the children, 
in some instances, have surrendered all their rights to one 
of their number, so that the holding might not be further 
subdivided. (Land and its Rent, last Chapter.) 

While this is going on, however, numerous large hold- 
ings are being created. But this is not because land is 
concentrative in the hands of individual owners. Accord- 
ing to " Progress and Poverty " the accumulative power 
is Rent, this is the monster with arms reaching in every 
direction and grasping all! Even if land is being monopo- 
lized by a few, and the agent of accumulation is not Rent, 
then the whole argument falls. A little observation must 
convince anyone that large holdings of land are, in most 
instances, effected by the operations of Capital. Wealth, 
amassed in the marts of trade, is, not infrequently, used to 
buy up and bring together a number of small farms, thus 
creating one large holding. 



RENT, WAGES AND CAPITAL. 6l 

In the coal fields we have a good illustration of this: 
The coal lands, which are in most instances the property 
of many small holders, are usually amassed into large 
bodies, subject to the control of a single individual or 
company. This accumulation represents the operation of 
Capital; but seldom, if ever, does it represent the power of 
Rent. The Standard Oil Company is said to be investing 
its surplus Capital in Western lands, but this surplus, 
evidently, does not represent the ordinary accumulation of 
Rent; it represents the profits of many " bull " and " bear " 
movements, inaugurated by that corporation. It is the 
result of speculations, in which Capital, and not land, is the 
chief figurer; or, it may be the result of unjust legislative 
favors. 

The large holdings of land that are so common in 
Europe, and the great grain fields of Dakota, are referred 
to as illustrating the monopolizing tendency of Rent. But 
these examples entirely fail. Who does not know that the 
great estates of Europe, or many of them, at least, are the 
result of confiscation and spoliation? They represent the 
kingly favors that monarchs have bestowed upon their 
flatterers and supporters. The accumulative power, in 
the first instance, was not Rent; that some landlords may 
not have squandered all their large incomes, but used them 
to extend their estates, proves little to the point. 

Neither are the large farms on the American frontier 
the result of the accumulative power of Rent. They can- 
not be, because the rates of Rent on' the margin of culti- 
vation are only nominal. The cheap and fertile lands of the 
West have been an inviting field for speculation and 



62 RENT, WAGES AND CAPITAL. 

enterprise, and many of the large farms and ranches rep- 
resent the capital of individuals and corporations, who 
made their money in the Eastern centers of trade and 
population. Few, or none of the Dakota wheat farms are 
the result of acre added to acre by the instrumentality of 
Rent. Most people well know that many of the large 
tracts of land held by individuals and corporations were 
secured by grants from the government to railroads, and 
through them to individuals. These large holdings, in- 
stead of representing the accumulative power of Rent, 
too often, represent the corrupt power of lobies in our 
National Capital! They represent millions of acres be- 
stowed by subsidized legislatures. 

The organization, known in the United States as " Pa- 
trons of Husbandry,'' is, in its very inception, a disproof of 
the ideas held by Mr. George. He assumes, as has been 
seen, that Capital, as well as Labor, is denied its own by 
land-holders, but here is a society of agriculturists, founded, 
not for the purpose of raising Rents, not for the purpose 
of raising the price of their products to other classes, but 
for the avowed purpose of protecting themselves from 
what they believe to be the encroachments of capitalists in 
character of middlemen. The idea holds extensively that 
the producers are the victims of this class, and this opinion 
is not held only by the members of the organization named, 
but has currency among all land-holders. 

It is not possible that these opinions are only "make^ 
believe" — that they are merely fancies. If the opposite 
were true, if land-holders were making all other classes pay 
tribute to them, it would be impossible for current beliefs 



RENT, WAGES AND CAPITAL. 63 

to entrench themselves so firmly in the public mind. It 
would be impossible to establish a society of national 
dimensions upon opinions so palpably false, and carry it 
beyond the incipient stage. We may admit that opinions 
are crude, and efforts to amend and ameliorate, short of 
the mark, but, nevertheless, these ideas and efforts gather 
around a central truth that is scarcely to be disputed. 



64 RENT, WAGES AND CAPITAL. 



CHAPTER V. 



I again revert to the quotation used at the beginning of 
the last chapter, in which we are told that, " If one man 
can command the land upon which others must labor, he 
can appropriate the produce of their labor as the price of 
his permission to labor." Here we find the effects of dis- 
tribution entirely ignored. If subsistence was now princi- 
pally drawn from the soil direct, as it was in primitive 
times, this idea might have been advanced with some 
degree of plausibility, but with modern subdivisions of 
labor the argument fails. 

The agriculturist is dependent upon artisans, mechanics, 
merchants, and professional men in almost the same 
degree that they are dependent upon him. He is depend- 
ent upon agriculturists in other countries and climates, 
whose products are different from his own. Nineteen 
articles of every twenty that he consumes are produced by 
others. With the march of human progress tastes have 
become refined and desires educated, until the crude 
materials of earlier times no longer satisfy. There are 
many articles of consumption now considered of prime 
necessity that were unheard of not so very many years 
ago. The complexity of necessity and desire renders each 
class in the community dependent on all the others, and the 



RENT, WAGES AND CAPITAL. 65 

agriculturist no less so than any; it gives the mechanic 
control of the means of existence as absolutely as though 
he was a land-holder. The agriculturist of to-day would 
deem it an impossibility to go without shoes, and this gives 
to the shoemaker command of agricultural products, just 
in proportion to the land-holder's necessity for shoes. To 
the farmer, clothing for the body is indispensable, and those 
who produce it command the products of his farm abso- 
lutely, to the extent of his necessity and desire for clothing. 

The land-owner must have a bed upon which to rest, a 
chair upon which to sit, a table upon which to eat — he 
must have, in short, an hundred articles which he cannot 
himself produce, and the producers of which command 
their equivalent in the products of land. 

The laws of distribution are also entirely ignored in the 
details of the plan to confiscate Rent. It prepares to 
appropriate Rent by taxation, to abolish all taxes except 
those on land values. " What I, therefore, propose, as the 
simple, yet sovereign remedy, which will raise Wages, 
increase the earnings of Capital, extirpate pauperism, abol- 
ish poverty, give remunerative employment to whoever 
wishes it, afford free scope to human powers, lessen crime, 
elevate morals and taste, and intelligence, purify govern- 
ment and carry civilization to yet nobler heights, is— 
to afifii'oftriate Rent by taxation" 

It is claimed that a tax upon land values will fall entirely 
upon landlords, because the burden of such a tax cannot 
be shifted upon other industries. In support of this Ri- 
cardo is quoted as follows: "A tax on Rent would fall 
wholly on landlords, and could not be shifted to any other 

5 



66 RENT, WAGES AND CAPITAL. 

class of consumers," for it " would leave unaltered the dif- 
ference between the produce obtained from the least 
productive land in cultivation and that obtained from land 
of every other quality." 

This might be true if products and prices were absolute 
quantities, but it cannot be when they are relative, all the 
economists to the contrary notwithstanding. A tax upon 
land must and will distribute itself upon all industries; this 
is true, because men and Capital seek to employ them- 
selves where they obtain the largest return. The operation 
of this principle makes the profits and returns the same in 
all imployments, taking into account, of course, the risk 
and agreeableness, and some such minor details. That 
profits are everywhere the same, subject to these limita- 
tions, has been abundantly explained by most of the 
economists. 

Evidently this principle holds in present distribution, and 
the profits on land are of the same proportions as those in 
the industrial occupations. The profits on land are, in fact, 
lower than those obtained elsewhere, for the reason that 
land investments contain the elements of risk in the small- 
est degree. 

Suppose an onerous tax to be imposed upon some 
designated industry, what must be the logical result? It 
must be a re-distribution of efforts to production, princi- 
pally affecting the taxed industry, but scattering its effects 
through all. In the event of such a tax, Capital and Labor 
would be withdrawn until the price of the product, in 
consequence of the curtailed production, has advanced to 
the amount of the tax and the profits are again the equiv- 



RENT, WAGES AND CAPITAL. 67 

alent of those in other industries. And why should not 
this principle operate if such a tax be imposed upon land? 
An attempted explanation is as follows: "Now, the way 
taxes raise prices is by increasing the cost of production 
and checking supply. But land is not a thing of human 
production and taxes upon Rent cannot check supply. 
Therefore, though a tax upon Rent compels the land-owners 
to pay more, it gives them no power to obtain more for 
the use of their land, as it in no way tends to reduce the 
supply of land." 

The idea conveyed here is that as a tax cannot reduce 
the supply of land, it, likewise, cannot reduce the product 
of that land. The land and product are taken as one. It 
is impossible to conceive how such an opinion could find 
lodgment anywhere. Land is a fixed quantity, but its 
product is not. The amount produced from a given 
quantity of land may be largely increased, or it may be 
reduced, and the same has often been done. The products 
of land are amenable to the laws of supply and demand. 
There is a continual fluctuation in price, a raising and 
falling, without reference to the price of land, which they 
do not follow. 

It is to be taken for granted that the profits on land are 
equivalent, all things considered, to the profits elsewhere; 
and with the sharp competition of the present, the average 
is not large. If a tax sufficient to cover what Mr. George 
assumes to be Rent proper, is imposed, it would, of course, 
take all the profits ; and, besides, leave a deficiency on the 
cost — and still he says there would be no change and the 
farmer would get no more for the products of land! It 



68 RENT, WAGES AND CAPITAL. 

is impossible that such conditions could continue for any 
length of time. And it is held that such a tax would inure 
to the benefit of labor; but who can, for a moment doubt 
that one of the first results would be a substantial reduc- 
tion of the Wages of agricultural laborers. 

No account seems to be taken of the fact that Capital 
enters so largely into production from land. I have 
endeavored to show in the course of this writing, that, 
after Labor and Capital are replaced and repaid, there 
remains a very small margin for Rent. Although some 
allow more margin than I do, none deny the importance 
of Capital and Labor in agricultural production. And 
Capital here is influenced just as Capital in other places. 
If the return thereto is not up to the average it will flow 
out and seek other channels until the equilibrium between 
this and other fields of production has been restored. It 
may be, and has been said, that Capital cannot be with- 
drawn, and that land-holders must, of necessity, operate 
their lands. That will be true to some extent, and it is 
true under present conditions that land-holders must, of 
necessity, till the soil they own; and that is a reason why 
they are not monopolists, as that term is understood. But 
just as water seeks its own level, so will Capital adjust 
itself, until the return is proportional in all places. Although 
Capital may seem bound up in the land, yet, little by little, 
it will find its way out. 

The same agency that tends to draw Capital from agri- 
culture would, of course, prevent outside Capital from 
being invested therein. As the earth increases in popula- 
tion the field of agriculture should and does extend with 



RENT, WAGES AND CAPITAL. 69 

it. But, if agriculture is burdened with a tax equal to the 
supposed amount of the Rent, Capital will certainly avoid 
it. And evidently those who would be engaged in it under 
such unfavorable circumstances would not voluntarily 
extend the field. 

The rigid distinction made by economists between 
Capital and land helps to confuse this question to the com- 
mon understanding. In the books the return to land 
proper, or Rent, and the interest on Capital are always 
held separate; but in real transactions this distinction is 
lost. Land and improvements are reduced to their cash 
value, and the whole considered as that much Capital, 
and profits and returns estimated on a Capital basis. In 
the United States, especially in the older parts where land 
is largely held on purchase, its possession is considered the 
possession of that amount of Capital, and the profits arising 
as a return on the money invested. 

Let us suppose that a capitalist has ten thousand dollars 
in cash, which he desires to invest; money is worth in 
trade circles 6 per cent., but on a landed investment 4 per 
cent, is the equivalent. The capitalist invests in improved 
land, paying therefor ten thousand dollars, and the return 
or profit is 4 per cent, agreeably to calculation. Where 
do we find here a margin for Rent? The return, 4 per 
cent, only pays the prevailing rate on the Capital he 
invested. Estimates are seldom made referring part of the 
return to Capital and a part to land. Neither is the 
Capital estimated as land and the whole return as Rent; 
but land is almost universally reduced to a Capital basis 
and the whole return as interest on Capital. This custom 



70 RENT, WAGES AND CAPITAL. 

of estimating land in dollars and cents and reducing it to a 
Capital basis, subjects the land itself to the laws that govern 
Capital. 

In countries where the original fertility of the soil has 
been exhausted, and the same soil renewed by artificial 
means, it will be found that the improvements have cost 
equal to the full value of the holding. The holders of such 
property invariably regard it as a Capital investment, and 
their profits are estimated as a percentage. The term 
" per cent." always implies a Capital basis. The owners 
of the great bonanza farms, of which complaint is made, 
do not estimate their profits as a Rent obtained per acre, 
but strictly as a percentage, and they compare it with the 
percentage of return to Capital elsewhere, when they 
desire to learn if theirs is a paying investment. 

With the improvements costing almost equal to the full 
value of the land, and with the growing tendency to 
reduce land and land products to a Capital basis, it is 
almost impossible for economic Rent to arise. When, 
therefore, a tax is imposed, ostensibly upon land, it must 
be paid principally from a fund that constitutes the interest 
on Capital. Mr. George says that property in human 
products must be sacredly guarded, and that the right to 
take interest on the accumulations of labor is undoubted; 
it would, therefore, be a great injustice to take the interest 
obtained on Capital invested in improvements on land, in 
order thereby to get the atom of Rent that may exist. 

A tax levied against any particular held of production 
has a tendency to render production in that line exclusive; 
a special or exceptional tax is obnoxious, and its imposition 



RENT, WAGES AND CAPITAL. 7 1 

is usually accompanied by restrictions that prevent people 
from engaging in the business against which it is directed, 
and hence, strange to say, it fosters monopoly. For ex- 
ample, take the tax on whisky; upon that article a very 
heavy tax is imposed, and yet all the manufacturers favor 
it and object to its being removed. And why? Because 
such a tax renders the business exclusive. The " red 
tape " that of necessity runs through a business thus taxed 
is practically an organization of, and a binding together of 
the persons engaged in it. Small and weak operators are 
driven out; combination becomes easy, and a monopoly is 
established. 

But, it must not be forgotten that, as I have already 
intimated, the tax to be imposed upon land values is, in fact, 
a tax upon the product. The tax must be paid, not with the 
land, for it cannot be, but with the product. Now one of the 
reasons given for a tax upon land is that production may 
be as free as possible, but beyond all doubt, when a tax 
must be paid out of the product, the producer will account 
it against the cost of production. The taxes that are now 
paid are invariably placed by agriculturists against the 
cost of production. All current expenses, such as interest, 
Wages, taxes, implements, &c, are considered as additions 
to the cost of production. 

But we are told in the last quotation that land-holders 
will get no more for the use of land, and that production 
will not be less, because the supply of land will not be 
reduced. Only farmers use land direct, and to say that 
they will get no more for the use of land means that they 
will get no more for the product. The inference is that 



72 RENT, WAGES ANd CAPITAL. 

the supply of land not being less, it will come in competi- 
tion with itself, and keep the amount of the product up to 
its present proportions. But the standing accusation of 
" Progress and Poverty " is, that under the present system, 
landlords are all-powerful monopolists, who withhold land 
from use, if they do not get their own price for its product, 
and thus enslave all other classes. If they are monopolists 
now, why will they not be if the proposed tax is levied? 
Their number will not be increased, it will be reduced, 
rather; the supply of land will not be lessened, and, if they 
are monopolists now, they will remain such. They can 
and will, in that event, add sufficient to the price of the 
product to make good the amount of the tax. But it is 
said, that land cannot be withheld from use when Rent is 
confiscated through the medium of a tax — that land-holders 
must operate their lands to avoid the loss a heavy tax- 
would occasion; and, in most instances, to obtain the 
means of paying the tax. It would undoubtedly be nec- 
essary for holders to do this, but not more so than under 
present circumstances. I have shown that a great amount 
of Capital is represented in land, in some instances to the 
full value of the holding; to withhold land from use would 
result in a loss of the entire interest. If land-owners can, 
under the present system, let it lie out of use and thus lose 
all the interest, they can under another system do the same 
and lose, in addition, a tax equal to all the economic Rent 
that can be discovered. 

But as has been already stated, land can be used and 
not consumed, and hence there can be no object in holding 
land out of use. Land is withheld, principally, in new 



RENT, WAGES AND CAPITAL. 73 

countries and on the margin of cultivation, where values 
are only nominal and Rent is nothing. But this withhold- 
ing of land from use is an imaginative evil, which has been 
made unduly prominent by much talking about. It will 
be accepted at what it is worth. 

It has been a question among legislators and statesmen, 
whether or not, all taxes should not be raised from land 
and real estate. This is thought to be the best, because 
many kinds of personal property are not visible, and hence 
escape taxation, thus making the burden unequal; 
whereas, land cannot be kept out of sight and a tax thereon 
would bear uniformly. But no one has even supposed 
that such a tax would not distribute itself and bear upon 
all classes — that land-holders would bear the burden of 
taxation alone. 

The oft repeated argument of " Progress and Poverty '» 
is that Rent must be confiscated in order that the producer 
may receive the entire product of his own labor. "The 
right to exclusive ownership of anything of human produc- 
tion is clear." This thought is made prominent throughout 
the entire work, and its truth will not be disputed. But, 
the author of that work in his eagerness to magnify Rent, 
and make his plans operative, has found it convenient to 
confiscate even the products of human labor. He says 
that when the improvement becomes indistinguishable 
from the land, it also is to be confiscated — that the rights 
of individuals must give way to the rights of the State. 

As a basis of the proposition to confiscate improvements, 
which are the products of labor, when they become insep- 
arable from land, the theory is advanced that the value of 



74 RENT, WAGES AND CAPITAL. 

land, as well as the value of the product, is derived, princi- 
pally, from the community; and that, therefore, to the 
community it belongs. In illustration of this idea the 
author of " Progress and Poverty " has drawn a picture 
of the life of a frontiersman, previously referred to. In 
this it is shown that the first settler has few or none of the 
conveniences of civilization; it is shown that he has no 
neighbors, no markets, no schools, no churches, no post- 
office; and that as a consequence, his land and the products 
thereof have little value. But soon another settler moves 
in, and another, and another; soon they have a railroad, a 
town is started, and the frontiersman now has most of the 
conveniences of civilization, and his land and the products 
are greatly enhanced. The argument upon this is that it 
is the community, or general public, which has come to, 
and established itself around, the first settler, that has given 
the principal value to his land and its products. Reason- 
ing therefrom, it is an easy step to the conclusion that the 
community may justly appropriate the additional value it 
has created. 

This seems plausible, and to some, convincing, but we 
have only to reverse the argument and it loses its force 
entirely. Can we not say that those who have gone into 
new countries, and suffered the privations incident to a 
frontier life — can we not say that they have done the 
community a great service, and that the community is, 
therefore, indebted to them ? Can we not say that those 
who have endured the hardships of " conquering the wild- 
erness " are entitled to extra compensation ? Is it not true 
that every enterprise or individual who comes into a 



RENT, WAGES AND CAPITAL. 75 

community is greatly benefited by those that have been 
there before ? This is incontestable, and the settler may 
ask reimbursement with as much, or greater, show of 
reason, from those who follow, than the latter can offer for 
the appropriation of the increase consequent upon their 
coming. 

But there should be no difficulty in understanding this 
part of the question ; each has been benefited in about the 
same proportion. The pioneer has reaped the greatest 
benefits, but he has endured more hardships to advance 
civilization. Those who have come last have received the 
least of the increase attending the growth of the community, 
but they have done the least to promote it. 

Not the least of the objections that arise to the confisca- 
tion of Rent, or in fact any other of the individual 
possessions of the people, is that the vicious elements of 
society are made full partakers of benefits which they have 
done nothing to create. With the increase of population^ 
and the growth of towns and cities, there come the 
parasites of society, those who live by their wits, or their 
wickedness, as the case may be ; sharpers, quacks, gamblers, 
thieves, robbers, prostitutes, &c, &c. Under the proposed 
regime these are to have equal shares of property appro- 
priated from the industrious and reputable — those who 
have done their best to build up society. 



j6 RENT, WAGES AND CAPITAL. 



CHAPTER VI. 



I have anticipated the law of Wages in the third 
chapter, in which the effects of labor-saving machinery are 
considered. What is the law of Wages ? It is thus 
defined in " Progress and Poverty : " " Wages depend 
upon the margin of production, or upon the produce which 
labor can obtain at the highest point of natural productive- 
ness, open to it without the payment of Rent." 

The law of Rent is here made the law of Wages, and 
granted that economic Rent is the important factor it is 
represented to be, then the law of Rent is in part discovered; 
but, as I have endeavored to show in the course of this 
work, Rent proper is a comparatively insignificant quan- 
tity, hence Wages must seek some other law or combina- 
tion of laws. 

The trouble with most writers on this subject has 
been that they formulate a system or rules which they hold 
to be fixed and unchanging, and to which they think all 
social phenomena are conformable, and by which they are 
explained. The truth is, that while there are fundamentals 
that are accepted as such by all, yet, even these, are 
modified by changing circumstances and advancing civili- 



RENT, WAGES AND CAPITAL. 77 

zation, until seemingly, at least, they fail to explain the 
social status of the present. 

Now there is nothing easier than the apprehension of the 
law of Wages, or natural Wages, as they arise under 
simple conditions. When every man produced for himself, 
and by the most simple methods, his Wages were the 
entire product of his Labor; and this is natural Wages at 
all times. No man has any right to the product of another 
man's Labor. But with the present complex systems of 
production it is difficult to determine the proportion of 
Labor each man has performed. Labor is no longer direct; 
the efforts of many different persons are represented in 
the same products; besides, machinery is used in every 
field of industry, and Capital has become indispensable. 
And, again, the finished product must be brought to the 
consumer through the medium of the merchant and trans- 
portation companies. 

All these elements enter into and are a part of the 
machinery of production, and it is difficult to determine 
with exactness the proportion due to each one. But it is 
certain that natural Wages will give to each element the full 
amount of its earning. We shall say that production in a 
given line is ioo; that Labor has rendered 75 per cent, of 
the entire service to the producing of it, machinery and 
Capital 10 per cent., the merchant 10 per cent., and the 
transportation companies 5 per cent. Natural and just 
Wages would give to the Laborer 75 per cent., to Capital 
and machinery 10 per cent., to the merchant 10 per cent., 
and to the transportation 5 per cent. 

But do natural Wages always obtain ? Theoretically 



78 RENT, WAGES AND CAPITAL. 

the whole system is self-regulative, but there are so many 
interferences and obstructions that we are compelled to 
answer in the negative. After a careful study of the 
question I am unable to discover any inflexible law of 
Wages. There are certain influences that are fundamental 
and continually bear toward certain results. These, 
if operative, incline to bring Wages to their natural and 
normal condition. The influences that carry Wages from 
their natural basis are almost innumerable; many are 
transient, they come and go; many are permanent. There 
is no single circumstance or condition, there is no absolute 
law by which Wages are controlled. 

In production there are two principal elements that enter 
into the cost of it, and fix the price of the product, and 
between which the return must be principally divided. 
These elements are Labor and Capital. I can imagine the 
disdain with which this proposition will be received by the 
apostles of Rent. I take it, however, that there is little 
that enters into production, or, rather, the cost of produc- 
tion, that cannot be assigned to Labor and Capital; or 
that is not conformable to the rules governing the one or 
the other. Rent being only a nominal quantity, need 
scarcely be considered as an element effecting the division 
of the product. 

When there is competition, for that which costs nothing, 
nothing can be charged. Among land-holders there is 
abundant competition, and in agriculture the profits are in 
proportion to those in other pursuits. This gives interest 
and Wages, but nothing for the gratuitous yield of the 
soil; hence no Rent. This applies to the ordinary produc- 



RENT, WAGES AND CAPITAL. 79 

tions from land. In the production of the precious metals 
Rent enters largely, because of a very limited field of 
operation and a comparative absence of competition. There 
would be no precious metals if it were not so; to establish 
Rent here, is no proof that it holds throughout. 

I eliminate Rent, therefore, and will endeavor to find the 
laws, or at least some of them, that govern the division of 
the product between Capital and Labor. This inquiry, of 
course, involves all the intricate relations of Labor and 
Capital. It is a field widely traversed, and one of many 
contests. That I, or any one, shall as yet be able to come 
entirely out from among the rubbish to be found here, can- 
not be confidently claimed. 

That all, in production, that is not Labor can be placed 
to Capital must receive ready assent. As to machinery, 
its value in the question at issue is based not upon its util- 
ity, but upon the cost of its production and reproduction. 
It is estimated in dollars and cents, and hence belongs to 
Capital. Machinery is worn out and consumed, but its 
consumption is the consumption of Capital. It is believed 
by many that machinery takes the place of Labor to the 
extent of the work it performs, and that the owner of a 
machine has a profit equal to the Wages that would have 
been paid to laborers for doing the work, less the cost of 
the machine, but such is not the fact. A capitalist places in 
his shop, at a cost of $1,000, a machine that does the work 
of twenty men; if it is a machine of general use his profit, or 
return for the use of it, will be the same as $1,000 invested 
in any other part of his business. In no event will the 
profit be equal to the Wages of twenty men. In the 



80 RENT, WAGES AND CAPITAL. 

division of the product, therefore, nothing is to set apart 
for machinery; to the extent of its cost it is Capital and 
nothing more. 

Most economists have made superintendence a separate 
and distinct element in production, and claim a distinct 
fund for the payment of it. This is erroneous: superinten- 
dence always goes with the possession of Capital, and 
when Capital is paid superintendence is paid. It is gov- 
erned by the same rules that govern Capital. Superinten- 
dence, as it relates to this question, is not properly defined. 
It has been the rule to account the Wages of hired over- 
seers and managers as Wages of superintendence. Wages 
paid to persons in this capacity belong to the same fund as 
the Wages paid to common laborers. They are all paid 
alike for services rendered. The Wages of the man who 
is paid to stand by and oversee others at work is nothing 
different from the Wages of those whom he is employed 
to oversee. The difference is only one of degree and not 
of kind. The Wages paid to managers bear the same re- 
lation to the Capital of the owners as those paid to common 
laborers. The Wages of both have the same place in an 
economic estimate. The difference is only that between 
common and skilled labor. 

Actual superintendence is that general oversight always 
given by the owners of Capital, and it cannot be hired. 
Superintendence is that attention, interest and care, that 
the owners of a business — those who bear the risk and 
enjoy the profits — must always give. No amount of hired 
management can make unnecessary the general oversight 
of the owners of Capital, and this only is a real superin- 



RENT, WAGES AND CAPITAL. 8l 

tendence. We find such men as Joseph Cook, in one of 
his Boston lectures, assigning to superintendence a separate 
place in production, and claiming for it a distinct compen- 
sation; and further, he says the just Wages of superin- 
tendence, therefore, can easily be determined by finding the 
sum for which it can be hired. He makes the same 
mistake; for, beyond all doubt, superintendence is incum- 
bent upon the owners of Capital, and Wages paid to 
persons hired in any capacity are controlled by the same 
economic laws, and cannot be separately estimated. The 
higher Wages paid to overseers are the parallel of the 
Wages of skilled labor,- but all are alike for services 
rendered. 

Having now found in what actual superintendence 
consists, we have next to find what proportion of the 
product, if any, must go to repay it. And here, again, 
current theories are at fault; for, as I have already stated, 
the oversight of Capital is inseparable from it, and rises 
and falls with it. The possession of Capital, and the 
management of it, must go together. To refuse to exercise 
a general oversight, or management, of Capital is to forego 
the possession of it. How can payment be demanded for 
management when that duty must be performed whether 
it is paid for or not ? 

In practice it is seldom the case that any account is taken 
of the Wages of actual superintendence ; and, if there are 
any such Wages, they are included, without designation, 
in the general profits or returns. The Capitalist, as a rule, 
invests his money expecting in return a percentage com- 
mensurate with all the circumstances attending it. This 

6 



82 RENT, WAGES AND CAPITAL. 

return is estimated entire as the interest, or profit, on the 
Capital invested. There are no fine distinctions by which 
the return is divided between Capital and the management 
of Capital. It is a fund that all comes from the same 
place and goes to the same place, and whether it is more 
or less, it has always been accepted entire as profit or 
interest. 

This aught not to need further explanation, but to clear 
the subject of all doubt, the following illustration will suf- 
fice: A goes to B to obtain a loan of $1,000. B says, " You 
can have the money at six per cent., as that is what it is 
worth in these times, but you must pay $10.00 more as 
Wages for taking care of and managing my money." A 
replies, " I will pay you six per cent., but nothing in addi- 
tion for taking care of }^our money, for that you must do 
whether I borrow it or not. [ will get the money from C, 
as I know he has it to lend." Whereupon B answers, " It 
is true that I must take care of my money, whether I lend 
it or not, and I may as well let you have it." 

Now it is very evident that if B could have demanded 
and obtained $10.00 additional, it would not have been 
because he was entitled to, or could have obtained, Wages 
for superintendence proper, but because the supply and 
demand of money enabled him to do so. And in that 
event there would have been no hair-splitting division of 
the demand, but it would simply have been for seven per 
cent., and Wages for management not thought of. 

It will be said that this is not a fair illustration — that the 
care of money at interest is much less than that of money 
invested in some industrial enterprise. Agreeing to this, 



RENT, WAGES AND CAPITAL. 83 

(although it will not be agreed to by all,) the answer is 
that the greater profits growing out of this kind of invest- 
ment are an inducement to the capitalist to undergo the 
additional labor its oversight brings. And cause and effect 
must not be made to change places; the profits in the in- 
dustries are not larger because more oversight is required, 
but more oversight is required because the return is larger. 
The same circumstances that increase the profits, likewise 
increase the management. 

It is clear, therefore, that no separate estimate need be 
made of superintendence, nor any distinct part of the pro- 
duct set apart to repay it. There is little authority for it 
in theory and no more in practice. But, let the Wages of 
superintendence be whatever fancy may dictate, they still 
are governed by the same laws that govern profits, rising 
and falling as they do, and there need still be no division of 
the product. 

Most writers have given great prominence to risk; and 
a portion of the product, the amount of which no one has 
been able to designate, is claimed for the payment of it. 
This element of risk is much talked about, and as much 
exaggerated. Like the Wages of superintendence, the 
fund for the payment of risk loses itself in and becomes a 
part of the general return to Capital. It is doubtful, indeed, 
if for the average risk anything at all can be claimed. 
There is no disposition that men can make of their wealth 
or possessions that does not involve a risk. If Capital is 
withdrawn from active use and deposited in banks, it is 
still not safe; if it is hoarded, thieves may steal it, or fire 
burn it. 



84 RENT, WAGES AND CAPITAL. 

Risk, like superintendence, is inseparable from owner- 
ship. A capitalist cannot take a risk or not take it at 
pleasure, and it is not correct reasoning to say that he can 
demand and obtain reimbursement for a disadvantage that is 
his in any event. Those who have wealth must bear the 
burden of its possession. If a capitalist should say " You 
must pay me for the risk I have of losing my possession," 
which would be equal to saying that if he was not paid he 
would give up his possessions; for in no other way could 
he avoid the risk. He could not say that he would with- 
draw his Capital from use, for he could not thus escape, 
while he would lose the profits or interest. 

The only point at which anything could be charged for 
risk is when it is of a special nature, as in the manufacture 
of gunpowder, dynamite, and even here it is subject to the 
rules that govern Capital. If the amount of Capital, seek- 
ing investment in any hazardous enterprise, is ample, the 
element of risk is reduced to small proportions. The dan- 
gerous enterprises are not many. In the ordinary vocations 
the risk is about the same throughout. In the present 
times, when machinery and steam power are prime factors 
in production in every line, there is a sameness of condi- 
tions that leaves few special risks. 

For years the economists have been claiming compensa- 
tion to Capital for risk, but they seem not to have discov- 
ered that Labor could ask the same, and with greater 
reason. The capitalist is made to say, " I have risks to 
undergo; I may lose my Capital, or a part of it; I may 
lose my profits, or the persons who buy my products may 
become insolvent; therefore, the community — the consum- 



RENT, WAGES AND CAPITAL. 85 

ers — must pay me for these risks in addition to a profit for 
the use of my Capital." May not the laborer, as well, 
say: "And I, also, have risks to take; I may lose my life; 
I may lose my health; and my life and my health are my 
Capital; or I may lose my Wages; those who employ me 
may become bankrupt, or they may defraud me of my 
earnings; therefore, the community — the consumers — 
must pay me for these risks in addition to paying me my 
Wages?" Why not this, as well? 

But it is all a fallacy. There are enterprises that endan- 
ger life and limb, and in which higher Wages are paid, 
but those are exceptional; just as are the hazardous enter- 
prises in which Capital may engage. This element of 
risk is present in all human undertakings, and one class of 
men cannot demand that the community shall stand between 
them and the uncertain conditions of life. Perhaps Cap- 
ital has not asked that the community shall do this, but 
the books have demanded it, nevertheless. 

Stripping the question of all the rubbish that has been 
piled upon it, the conclusion is that for the ordinary and 
inevitable risks of Capital and Labor there is no distinct 
compensation. I, therefore, set aside superintendence and 
risk as influential factors in production, and allow them no 
share in the division of the product. The question is sim- 
plified and the relation of Capital and Labor is more 
clearly apprehended. 

The relation of Labor and Capital to production is such 
that if each is given its legitimate force, the greater benefits 
will be with Labor. Labor is first. Labor creates 
Capital; it can exist, at least, in a simple state, without 



86 RENT, WAGES AND CAPITAL. 

Capital. The American Indian lives with no Capital but 
his bow and arrow. But Capital has no existence without 
Labor. Labor is competent to consume its own product; 
Capital only in part; hence an increase of Capital must 
result in a lower rate of interest, or, which is the same 
thing, it will receive a smaller percentage of the joint 
product. The same cannot be said of Labor. There is 
no increase of the number of laborers that can, by natural 
laws, reduce their Wages, or percentage of the whole 
product — unless we except a local increase by which the 
number in one place is made disproportionate to the num- 
ber elsewhere. The opinion prevails that there may be 
too many laborers. That supply and demand do not make 
room for more than a certain number. This is a funda- 
mental error. Every laborer born into the world is at 
once a producer and a consumer. Every additional laborer, 
while he increases the supply, also increases the demand for 
the products of Labor. As a consumer he creates a demand 
for the means of existence, as a producer he supplies that 
demand. 

The tendency of Capital is to increase in a greater ratio 
than Labor ; it multiplies by its own earnings and also by 
the savings of Labor. Capital not only increases in amount, 
but also in efficiency. With improved methods, produc- 
tion can be largely increased without using more Capital. 
A machine may be invented that will, with a stated 
amount of Labor and Capital, double the product; but 
the profits of the owner of the machine will not be increased 
in proportion; for as I have previously observed, it will be 
estimated at its Capital value. The owner will get only 



RENT, WAGES AND CAPITAL. 87 

the interest on the Capital represented in the machine — 
barring the advantages of the patent laws. The increase 
goes to the community and Labor is benefited. It should 
be remembered that many persons are laborers and capi- 
talists at the same time. Having a limited Capital, they 
perform their own Labor, and a part of what they receive is 
profit on Capital; but, generally, a larger part is Wages 
for their Labor. The laboring class thus becomes much 
the largest portion of the community. 

The consumption of the joint product of Labor and 
Capital has prime influence in fixing the rate of Wages, as 
well as the return to Capital. Consumption is, and must 
be, rapid. The things which men produce are of a perish- 
able nature, and especially those of which he has the 
greatest need; if production should entirely cease, the 
visible accumulations would soon be consumed or perish. 
It is incumbent, therefore, upon capitalists, (through whose 
hands, in modern times, nearly all products pass,) to find 
a market; it is incumbent upon them to find consumers. 
And who are the consumers ? Evidently the laboring classes, 
who are the great majority. Production is principally of 
common materials, such as are consumed by working 
people; hence Wages must be an amount sufficient to 
enable them to buy the bulk of the product. 

There are but few men whose possessions are so great 
that they do not desire to possess more ; hence Capital is 
used in production for the purpose of gain, and to that 
end the owners must not consume all their profits or share 
of the product; and Labor must be the consumer of that 
share of Capital which the owners of it do not themselves 



88 RENT, WAGES ANd CAPITAL. 

consume. That Labor may be enabled to consume this 
additional share of the product, necessitates an increase of 
Wages. And, again the savings of Capital must seek 
investment, and thereby production is further increased, 
and also the necessity for greater consumption. 

In the machine worked wheat fields of Dakota this is 
further illustrated. There is, comparatively, a very small 
amount of human Labor represented in production there, 
and in consequence, consumption is small in proportion; at 
the same time the volume of the product is immense, and 
must find a market and consumers outside of those who 
have produced it. This market must be found among the 
masses. Production, in this field, is principally due to 
land and Capital; but Labor is the principal consumer. 
None can have failed to remark the unprecedented com- 
petition among producers, merchants, and tradesmen. 
Millions of dollars are expended just to induce people to 
buy. Advertisements are spread broadcast, and drummers 
are in every highway, imploring the people to purchase 
their wares. There is more brain work done among those 
seeking to sell than in all the learned professions. So fierce 
is the contest that thousands are forced to the wall and 
into bankruptcy. The effect must be to reduce profits to 
a very close margin, and this is the equivalent of an 
increase of Wages.; 

In such works as " Progress and Poverty " the assump- 
tion is that competition is principally between laborers, 
seeking employment and the means of existence — that 
natural opportunities are monopolized and arbitrarily 
withheld. Now the number of laborers seeking employ- 



RENT, WAGES AND CAPITAL. 89 

merit is a less proportion than the piles of merchandise on 
counters seeking buyers. It cannot be true that land is 
withheld and Labor denied the opportunity of employment, 
for who but the laboring classes have produced the great 
piles of merchandise visible on all sides ? 

The phenomena, which seem to be continually before 
us, of a great surplus of man's necessities, while thousands 
in need are unable to purchase, will receive notice in a 
subsequent connection. 



90 RENT, WAGES AND CAPITAL. 



CHAPTER VII. 



From all the foregoing may be inferred the law of 
Wages. It is not found in a single unbending condition, 
but in a combination of circumstances that are continually 
modified by each other. 

It will be observed that Labor gains and that Wages are 
steadily increased by the economy of the question as 
presented. It is almost a venture to declare it! Every 
demagogue is abroad with a distressing tale of the wrongs 
of the laboring classes. Not to be consenting to the 
popular cry is to be suspected of antagonism to the work- 
ing people ; but I do not hesitate to say that their condition 
has been greatly improved — that it is better to-day than in 
any previous age and more, that it will continue to improve. 
They have many advantages that were not even thought 
of a few generations ago. They possess many things of 
every-day use that the rich did not know, even as luxuries, 
in earlier times. 

This latter truth is generally recognized. John Stuart 
Mill says, " It has yet to be proved that there is any 
country in the civilized world where the ordinary Wages 
of Labor, estimated either in money or in articles of con- 
sumption, are declining; while in many they are, on the 
whole, on the increase ; and an increase, which is becoming, 



RENT, WAGES AND CAPITAL. 91 

not slower, but more rapid. * * * * * * 
There is much evidence of improvement, and none, that is 
at all trustworthy, of deterioration, in the mode of living of 
the laboring population of the countries of Europe ; when 
there is any appearance to the contrary, it is local or 
partial; and can always be traced, either to the pressure of 
some temporary calamity, or to some bad law or unwise 
act of government, which admits of being corrected ; while 
the permanent causes all operate in the direction of improve- 
ment." 

This is a very fair statement; but Mr. George says 
that poverty deepens and Wages are the minimum, and 
tend to the Wages of slavery. But he has recognized the 
great and growing efficiency of Labor, which has increased 
productive power many fold. It is inconsistent that both 
these propositions should be advanced together. By the 
first, Wages, and hence consumption by the masses, are 
reduced to the lowest possible point; by the second, 
production, through modern improvements, approaches 
the highest point attainable. In these it is distinctly held 
that the consumptive capacity of the people is being 
steadily reduced, while their productive capacity is being 
as steadily increased. That this is an impossible condition 
of industrial society is evident at a glance. 

But this theory of Wages is no more wrong than is the 
prevailing one absurd. I refer to what is popularly known 
as the " Wages fund " theory. That Wages are created 
by Capital and are subordinate to it has been the opinion 
of a great majority of writers. Prominent among these in 
the United States is Prof. Perry. The most I have to say 



92 RENT, WAGES AND CAPITAL. 

on this part of the subject I have already written. The 
pages of " Progress and Poverty " contain nothing more 
•commendable than the terse criticism of this theory. One 
thing is, at least certain ; and that is, if this theory is true, 
then Wages and Labor are wholly subordinate to Capital; 
if Wages are dependent upon a fund that is drawn from, 
and is a part of Capital, then indeed " Capital is king " — 
then is the contest fundamental and everlasting. This see- 
saw theory, as Cook has termed it, necessarily teaches 
that that which Capital gains Labor must lose, and vice 
versa. It has been stubbornly defended by economists, 
who have immediately turned to lash Socialists and 
agitators, who have declared the same thing; but from a 
different standpoint and in different language. 

This idea, in some shape, continually appears. David 
J. Hill, of Lewisburg University, says that Wages depend 
upon the profits of production, rising when profits rise 
and falling when they fall. Now we have seen — and it 
has never been disputed — that* as a country grows older, 
Capital multiplies, and the rate of interest gradually lowers. 
The rate may occasionally rise from temporary or arbitrary 
causes, but the permanent tendency is downward; and 
lower rates of interest, of course, mean smaller profits, as 
both are alike the return of Capital. If, according to Hill, 
Wages fall with profits, then, with a lowering rate of inter- 
est, Wages must also gradually decline. Here we are 
again confronted with an impossible condition. A falling 
rate of interest is the equivalent of a smaller percentage of 
return to Capital, and if the percentage of return to Labor 
falls at the same time, then a large portion of their joint 



RENT, WAGES AND CAPITAL. 93. 

product is not distributed. The consumption of Labor 
and Capital together must be nearly equal to the amount 
of their combined product; and hence, if the profits of each 
are a declining per cent, then there will be a steadily 
increasing portion of the product not consumed. 

The same author tells us that when profits fall, Capital 
will be withdrawn, and the demand for Labor cease. This 
is simply re-affirming the old doctrine, that Labor is subor- 
dinate to Capital. There is no recognition of the bottom 
fact that the laborer brings with him into the world the 
supply of Labor and also the demand for it. 

This pernicious idea of the relation of Labor and Capital 
runs through nearly all economic literature. It has fastened 
itself upon college curriculums and journalism continually 
propagates it. A prominent newspaper remarks, "The 
Labor market has been overestimated." The Labor market! 
as though Labor was a commodity in the market to be 
bought and sold with a fund set apart from Capital for 
that purpose. Even so sagacious a writer as W. G. Sum- 
ner refers to " The Labor market, in which Wages are 
fixed;" and he laments that "No newspapers yet report 
the Labor market." Would he have it reported in a 
column with live stock or cabbages? Why not? If Labor 
is a marketable product, why should it not be thus quoted? 
Even Mill says that Capital cannot undertake to provide 
for every one that may be brought into existence. 

This class of economists, when they come to define what 
Wages ought to be, usually say that they should be 
enough to keep Labor in a working condition and provide 
for it in childhood and old age, or when in sickness; in 



94 RENT, WAGES AND CAPITAL. 

short, the argument is that Wages should be enough to 
insure the reproduction of Labor! The supply of and 
reproduction of cattle might be spoken of in the same 
strain ! Labor is spoken of as only a vehicle to production ; 
the laborer as only a creature that Capital uses or discards 
at pleasure! They speak as though Capital first existed 
and created men for its own use. 

These modes of expression are offensive and degrading. 
Is it any wonder that there should exist so much strife 
between Labor and Capital, when those who are thought 
to be learned, and are the instructors of society, say to 
Labor that it is only an instrument — a mere convenience — 
a shuttle-cock in the hands of Capital? Is it any wonder 
that strife is abroad when these doctrinaires are met half 
way by agitators, who appeal to the passions of laboring 
men? Those who assume to be teachers of the people are 
responsible to society for their disturbing doctrines. 

The inquiry, as to the permanent relations of Land, 
Labor and Capital, is about completed, so far as it is 
intended to be, in this volume; and we have found, I think, 
that the condition of all classes has steadily improved. 
There remain, however, some influences, mostly temporary 
or arbitrary, that seem to arrest the operation of these 
permanent forces, and almost to turn backward the wheels 
of progress; there are influences that seem to leave society, 
or at least the laboring portion of it, in a worse condition 
than before. These will be considered in the next chapter. 



RENT, WAGES AND CAPITAL. 95 



CHAPTER VIII. 



Amidst the progress of the age, and the improved con- 
dition of mankind, the cry comes that poverty deepens and 
social distress and discontent increase. It may seem par- 
adoxical, but this seeming condition, in part, grows out of 
the improved condition of the people. They are educated 
and intelligent ; much in advance of the people of earlier 
times; they have access to books, newspapers, and many 
other means of information, and as a result they have an 
extensive knowledge of affairs. They have a knowledge 
of social conditions, not only of the present, but, also, of 
the past. Labor takes a comparative view of its condition, 
and the comparison is not with the advantages or disad- 
vantages of our ancestors, but with the visible and obtain- 
able of the present. 

But the progress of the age brings its disadvantages — 
disadvantages that are actual and not comparative. The 
progress of the day is like a fast moving train; those who 
are aboard and moving with it obtain the advantages of 
rapid transit, but those who step off quickly meet destruc- 
tion, and those who cannot go are, in a moment, left behind. 

In a past generation, when industrial production was 
principally upon a small scale, when small establishments 



96 RENT, WAGES AND CAPITAL. 

were the rule, in which the owner and perhaps a few 
journeymen and apprentices worked, in 'those times, poverty 
was not so distressing or so suddenly enforced. When pro- 
duction, as well as distribution, was in a much greater de- 
gree local — that is to say, confined to a limited territory — then 
there were not those long seasons of depression and 
apparent overproduction, which are at the present time so 
distressing. If a small tradesman found that his business 
was falling off, he could dismiss a journeyman or two and 
no violence would be done to trade in general. The 
journeyman thus dismissed could move on to the next 
town, as they were accustomed to do, and there, perhaps, 
trade being local, their services would be in demand, and 
they suffered very little from being out of work. Produc- 
tion and consumption being local any thing like overpro- 
duction made itself felt at once and was arrested before 
there was any considerable accumulation. 

But in the present, these equalizing influences are lost ; 
production is carried forward in large establishments ; and 
not only this, but refined economy has grouped the 
industries in districts. New England makes a specialty of 
boots and shoes. Pennsylvania of coal and iron products. 
Each portion of the country has a special line. When 
overproduction — so called — comes, it first shows itself in 
goods unsold on the shelves of the retail merchants in all 
parts of the country; this is reflected or turned back until 
it reaches the centers of production. Here the situation is 
such that it is often cheaper to continue operations 
with a loss of profits, or even more, than it is to stop. It 
is not uncommon to see large establishments continue 



RENT, WAGES AND CAPITAL. 97 

at a loss, in the face of seeming overproduction, because 
to stop would bring greater loss. By the time the 
wheels of industry are finally stopped, overproduction has 
become general; as a consequence, there ensues a long 
season of idleness, and laborers in large bodies are left 
without employment. Where one man, or a half dozen of 
men, as of old, could move on and find work, it is impossible 
for a hundred or a thousand to do so; and if they could or 
should go a hundred or a thousand miles they would find 
the same condition. 

The situation of Labor is made worse because there are 
so few accumulations. This is an evil of the present sys- 
tem of production, that saving is not enforced. When 
the laborer worked for himself in his own shop the accu- 
mulation of a small Capital was necessary, and if there 
occurred a season of enforced idleness, or sickness, he was 
not immediately reduced to want. 

But, while this explains the operation, it is far from 
explaining the moving cause. To many, who do not look 
beyond, the answer is very easy; it is overproduction, pure 
and simple, say they. Here, with the majority, the inquiry 
begins and here it ends. 

But, how can we say that there is too much produced 
when there are hundreds and thousands who are in need? 
When nine men out of ten have wants and desires they can- 
not satisfy. The capacity of man to Labor, with all mod- 
ern helps, does not enable him to satisfy his desires, nor, in- 
deed, all his needs. Overproduction there is not, and will 
not be. It is under consumption, or, to state it more correct- 
ly, arrested consumption. The remedy, therefore, is not in 

7 



98 RENT, WAGES AND CAPITAL. 

placing a limit upon production, but in finding the causes 
that check and arrest consumption. 

One of the principal of these we have in the many 
unequal efforts to production. In order to prevent clog- 
ging in exchange, production in all lines must be a true 
proportion. If production in a particular line exceeds the 
economic proportion, the product cannot all be taken and 
consumed; and hence, overproduction in that industry 
must ensue. Resulting therefrom, production must be, in 
that line, reduced or suspended for a time; the further 
effect must be a reduction of Wages, and a portion of the 
laborers left without employment entirely. Idleness and a 
reduction of Wages will reduce the purchasing power of 
those employed in the disproportioned industry, and hence, 
a falling off of the demand they make for the products of 
other industries; the latter, having adapted themselves to the 
previous existing condition, are now thrown out of harmony. 
Thus the evil propagates itself from one industry to another, 
gathering force as it goes, until it may result in a general 
depression of business. 

Economists have given themselves little trouble about 
this matter, believing it to be self-regulative. The theory 
is, that Capital readily flows from one industry to another, 
thus maintaining a correct proportion. This, undoubtedly, 
is the predisposed movement, but, with modern facilities 
and refined methods of operation, a surplus will be had 
before the disproportion is apparent; and when it is dis- 
covered Capital cannot quickly be withdrawn. Operations 
being now on a large scale, Capital is extensively invested 
in expensive buildings, machinery, and in innumerable 



RENT, WAGES AND CAPITAL. 99 

appliances that cannot be abandoned, and an inharmonious 
distribution is thus enforced. 

It may be thought that the operation of natural laws 
should prevent Capital from being invested in an industry 
that has already a full proportion. But there are frequently 
recurring circumstances, either temporary or arbitrary, 
that increase the ratio of profits in particular industries, 
and thus create a rush of Capital to these places. The 
almost universal result is that this rush of Capital continues 
until the wheels of the industry are clogged, and overpro- 
duction in that line ensues. In these modern times 
development is rapid, and especially in new countries; 
some particular enterprise will show a rapid and sudden 
development, and Capital will flow to that place, with the 
result indicated. Railroad enterprises, especially in the 
United States, developed rapidly and Capital was invested 
without stint, and now the complaint is that competition is 
ruinous, and many of them declare no dividend. The 
development of the iron trade has been similar to this. In the 
production of petroleum we have a well defined example; 
that industry suddenly developed and the profits were for 
a time enormous; the rush of Capital was, for a time, 
unprecedented, with the inevitable result. Again, in the 
coke industry, of recent development in Pennsylvania, the 
same thing has been repeated. 

Beyond all doubt it is easier to see these discrepancies 
than to indicate a remedy. Perhaps they may be charged 
to a lack of conservativeness of method, or to the rush to 
get rich that predominates among the people. Too many 
people engage in business just as they would hold a lottery 



IOO RENT, WAGES AND CAPITAL. 

ticket; they understand that there are laws of trade that 
enforce themselves, but they expect, nevertheless, to obtain 
an exceptional position or advantage. They expect, in 
some manner, to outwit their competitors, or that some 
fortuitous circumstance will place them in advance. An 
apt illustration of the manner in which many people expect 
to succeed in business, is had in the action of certain man- 
ufacturers in an Eastern city; finding that there was too 
much competition for the raw materials used in their 
business, they formed a combination, and fixed the price 
at a lower figure; in the meantime each member went 
among the dealers in the raw material and offered a price 
a little in advance of the one agreed upon, thinking 
thereby to corral the supply. Of course the entire scheme 
failed. 

It is to this disproportion in production that I attribute the 
under-consumption that is properly supposed to be over- 
production. Perhaps there is no complete remedy. 
Perhaps men are not wise enough to preserve an ideal 
harmony; or, perhaps, men in their selfishness and avari- 
ciousness, scramble over one another to the injury of all. 
If these are causes, there is no specific remedy; at least, 
in governmental interference. 

Any circumstance that raises profits inordinately, or 
above the average, creates a disproportion, and all that 
follows. If there is a combination to force down Wages, 
it reduces the purchasing power of the laborer ; and, event- 
ually, affects Capital, as well as Labor. Usually the 
unconsumed profits of a business are invested in the same 
in which they are made, and if these profits are above the 



RENT, WAGES AND CAPITAL. IOI 

average, this particular line of business will be extended in 
a greater ratio; and, hence, again the insuppressible dis- 
proportion. 

The modern institution of " strikes " contributes to the 
same end; the operation is very simple. When a "strike" 
is in force the purchasing power of "strikers" is very 
materially reduced; in fact it may be said to be entirely 
suspended; for, when they are supported by a fund con- 
tributed by those who are at work, the)' really have 
no purchasing power arising from their present condition. 
The fund contributed to their support, represents, to 
the extent of it, a reduced purchasing power of those 
who have contributed. Production may be supposed 
to have adapted itself to the demand when all were at 
work, and hence when Labor is in part suspended the 
harmony is destroyed. Must it be said, therefore, that 
"strikes "are only an evil ? Not as such; Labor ought 
to ask the highest that economic conditions will give it, 
and it is entirely legitimate to act in unison in doing so — 
in fact combination is enforced. It is a feature of the times. 
Combination must be met by combination. But in view 
of the many disadvantages that may arise, a "strike" 
should not be inaugurated except upon very positive 
evidence of injustice. 

Governments may contribute materially to under-con- 
sumption by the collection of revenue in excess of current 
requirements; or, by holding moneys for a considerable 
length of time. When taxes are paid out in the same 
ratio in which they are received, there is no perceptible effect 
upon the business of the country. Those who pay the tax 



102 RENT, WAGES AND CAPITAL. 

must consume less to the amount of it, but those to whom 
the tax is eventually paid make the consumption good, and 
there is no disturbing of the relations between production 
and consumption. But, when taxes are levied in excess, 
and held in the public treasury for an indefinite period, 
consumption is thereby arrested. For every dollar of tax 
paid, something must be produced wherewith to earn the 
tax, but the consumption of the producer must be less than 
the product to the amount of the tax paid. If this tax is 
held as a surplus and not paid to government creditors and 
employes, who expend and consume it in the tax-payers 
stead, then every unexpended dollar represents its worth 
in products unconsumed — it represents under-consumption 
to the amount of the surplus tax. At the time of this 
writing there is a wide-spread complaint of over-production. 
For a few years preceding there has been a large accumu- 
lation of funds in the public treasury, and, undoubtedly 
this has contributed to business depression. 

It may not be amiss to mention here, that any legislation 
extending special privileges and advantages to a particular 
industry, thus creating undue profits, must have the effect 
of expanding that industry beyond its just proportion ; and 
ultimately there is a reaction that leaves the way strewn 
with many bankrupts. 

There is, perhaps, no more potent element in man's 
material affairs than money. Universally adopted as a 
vehicle of convenience, it has made itself indispensable, and 
has become master where it should be servant. But the 
uses and functions of money do not necessarily enter into this 
discussion. That the mismanagement of a currency will 



RENT, WAGES AND CAPITAL. IO3 

unsettle business every one knows. Any stringency of the 
money market hampers business, and a super-abundant 
supply invites speculation, by which a disproportion is 
quickly effected. Money of uncertain and changing value 
seldom fails to bring financial distress. A change in the 
value of money overturns all business calculations, and 
necessitates a new scale of prices; it is practically a change 
in the amount of debts and credits, all of which destroys 
the essential harmony, and brings the easily provoked 
disproportion between production and consumption. 

When we pass in review the innumerable remedies 
proposed, there can be but little surprise that so small an 
amount of progress is made; for, in fact, periodical depres- 
sions are fast becoming a fixed condition. In the pages of 
" Progress and Poverty " it is declared that the trouble all 
begins with private ownership of land — as are all the 
material, and most of the moral, troubles of nations and 
men attributed to the same cause. But of this I have 
already written. 

The remedy that is almost universally demanded is that 
restriction be placed upon production. This popular 
demand rests on a fundamental error, that places cause for 
effect. It seeks to curtail production, when the moving 
cause is under-consumption, and a disproportion in effort. 
Advices to lessen production come from every hand. 
Newspapers abound with knowing articles on over-produc- 
tion and predict a revival of business when the surplus is 
worked off. The trade journals, entering into details and 
statistics, declare to the members of their craft that they 
have only to exercise a little wisdom and unite to limit and 



104 RENT, WAGES ANd CAPITAL. 

reduce operations, and thus allow the surplus to be 
absorbed. 

Almost every industry is becoming a close corporation, 
that has its annual, semi-annual, or quarterly convention 
held to discuss the situation and pass resolutions. Pools 
innumerable are formed to limit the out-put and control 
the price of it, as well as to " kill off" rivals and weak 
operators, and thereby remove that abnormal quantity 
over-production. Congresses and legislatures authorize 
untold volumes of statistics relating to trade. Even some 
trades- unions, proceeding upon the Wages fund theory 
that Labor is a commodity to be purchased by Capital, in 
the market of supply and demand, have endeavored to 
apply a remedy by limiting the number of persons that 
shall be admitted to become skilled in their craft, and in so 
doing ignore the truth that Labor is first and holds within 
itself the supply and the demand. 

" Hard times " are everywhere discussed. Almost 
every individual can advance an opinion; but how seldom 
do we find on inquiry into the causes of under-consump- 
tion? The absurd notion seems to have taken possession 
of every one that the race can produce beyond its necessities 
and desires ; and even prosperity is alloyed by the fear that 
business will be " overdone " and " run into the ground 
again." And so it is, but not in the manner supposed. 
We seldom hear of an effort to establish a true proportion 
between the industries. Each occupation is principally 
concerned to get itself securely " fenced in," and being thus 
enabled to la}' tribute upon all the others — forgetting that 
the others are doing likewise and with about the same 



RENT, WAGES AND CAPITAL. IO5 

degree of success, and that, with a like effort by each, the 
efforts of all are a nullity. It is safe to say that the riddle 
of " hard times," will never be solved while the people 
follow the phantom of over-production. 

It has many times been explained that business depres- 
sions is the result of extra vagence ; but there is not, neces- 
sarily, any such result. If the people should be extrava- 
gant enough to consume all they produce, saving nothing it 
would be the greatest reason why they should continue to 
produce. In that event production would be enforced, 
there being no surplus. Extravagance would bring 
conditions the opposite to over-production. Those who 
expend all their earnings are left without resources when 
reverses come; but that is the most, unless they purchase 
upon credit, and in advance of, and to, a greater amount 
than their earnings. Eventually there will come a time 
for payment, when this over-consumption must stop, and 
the arrival of that time will, in some degree, unsettle the 
established business relations. 

But this supposed extravagance implies some improbable 
conditions. Consumption cannot be in advance of produc- 
tion — that is to say, nothing can be consumed until it is 
first produced ; and if the people become extravagant and 
consume more, that implies' that there is somewhere in 
reserve, a large surplus accumulated at some preceeding 
time. It implies, also, that some portion of the community 
has been holding this surplus, and is now ready and willing 
to distribute it upon a promise of future payment. 

It is the same with the large consumption of armies. 
The extravagance in times of war, has been repeatedly 



106 RENT, WAGES AND CAPITAL. 

referred to as a potent cause of depression; but as in 
the former case, this rapid consumption would enforce 
production. War does certainly endanger the industries 
but not by quick consumption. War disturbs business 
relations; it unsettles prices and values, and raises debts 
and credits. It unduly develops some industries; as, for 
instance, the production of munitions of war. There is 
little to fear from the consumption of armies, for nothing 
can be consumed that has not been produced; and pro- 
ducts cannot be borrowed from the future, though the 
price of them may. 

But, I do not attempt to enumerate all that operates to 
prevent the ideal state. Neither do I indicate a sovereign 
remedy. Man's condition is never greatly advanced by 
the sudden discoveries and heroic remedies of theorists. 
Difficulties and abuses disappear by a steady and onward 
movement against them. With the development of the 
race they disappear, one by one, by a process so gradual 
as scarcely to be perceptible. It is true that new and 
unforseen difficulties constantly appear, but they, in turn, 
give way and the condition of the people is better for every 
advance. There will, at times, occur a crisis in human 
affairs, when great things may be accomplished by one 
bold stroke, but this is not the rule of advancement. It is 
well ordered that people with hobbies are kept in the rear, 
or they would present us with a revolution with every 
rising sun. 



RENT, WAGES AND CAPITAL. 107 



CHAPTER IX. 



The inquiry draws to a close, and we have seen that 
Labor is a sharer in the progress of the ages. We have 
seen that Labor is first, and that modern distribution places 
it in advance of any preceding time. We have seen, in 
fact, that, with the natural operation of forces, Labor 
obtains the most substantial benefit. 

But, the inquiry would not be complete, if we ignore the 
prevailing opinion that Capital has supreme power. In 
all circles the belief is that the opportunities are all with 
Capital — that the enjoyments of life come only to those 
who can command it. I said, "in all circles," but there 
must be excepted those who receive the theories of " Pro- 
gress and Poverty," for in that, Capital, as well as Labor, 
is held to be sacrificed on the altar of Rent. 

The power of Capital holds, principally, in modern 
divisions and sub-divisions of productive forces. Capital 
has become an indispensable medium and agent in every 
business transaction. With the simple and direct methods 
of early times, Capital was much less the essential than at 
present. It is essential to the production of raw materials ; 
it transports the same to the place of manufacture; it builds 
large manufactories and fills them with machinery. It 



I08 RENT, WAGES AND CAPITAL. 

transports the finished product, and transfers it from hand 
to hand until it reaches the consumer. Capital embraces 
money, which is the medium and unit of all financial transac- 
tions, and through which, Labor receives its portion of the 
joint product. 

Capital, having thus insinuated itself into all the avenues 
of production and exchange, it is not surprising that it 
should command the situation. It undoubtedly appears 
on the surface, that Capital brings to Labor the opportu- 
nity of employment, When the question is reduced to 
first principles, however, such is found not to be the fact; 
but the visible phenomena are generally believed and acted 
upon. The advantage of Capital is that production is no 
longer direct, and that the laborer can not take his share 
of the product and by barter supply his wants. The 
laborer's portion is not immediately available ; hence, he is 
paid the equivalent in money, which is available. 

Money has been universally adopted, because of con- 
venience and cheapness; but it has now become a prime 
necessity, and exchange on a money basis is enforced. 
Money being a part of Capital, and Wages being paid 
therewith, we readily see the origin and plausibility of the 
Wages fund theory. 

The relative positions of Capital and Labor have been a 
stumbling block to the author of "Progress and Poverty;" 
he has discovered no antagonism between them, neither real 
or artificial. The difficulties of the subject he makes dis- 
appear in a characteristic manner — he simply denies that 
Capital is an indispensable element in production. By 
elaborate argument he explains that Labor supports itself, 



RENT, WAGES AND CAPITAL. IO9 

or can do so independent of Capital. In this, he unthink- 
ingly undermines his theory of Rent. If Capital is not an 
essential factor, then cultivation would not be forced upon 
poor lands while there are anywhere fertile lands unoccu- 
pied. Instead of being forced upon poor lands, those who 
now occupy them would have emigrated and settled 
upon rich, unreclaimed soils, where Rent is, admittedly, 
only a nominal quantity — whatever it may be elsewhere. 
It is, confessedly, by forcing Labor upon poor lands that 
Rent arises; and, if that Labor could transport and sus- 
tain itself without being dependent upon Capital in doing 
so, the best lands would be everywhere taken first. 

Capital is concentrated effort. It is accumulated Labor. 
It is power condensed, and drawn from Land and Labor. 
These attributes, and the relation of Capital to production, 
make frequent encroachments upon Labor possible, and 
open the way for those gigantic speculations by which 
great fortunes are made. 

From all that has preceded, we learn that any debase- 
ment of Labor quickly reflects or turns back upon the 
entire community, by destroying the harmony in productive 
effort; but such is the desire to have and multiply wealth 
that no consideration of this kind deters from unscrupulous 
speculation. Even when the ultimate results are recog- 
nized the process still goes on. It is useless to represent 
Rent as the yawning gulf into which everything passes, 
for the people know that in Capital we have the instrument 
of the greatest wealth. 

I cannot do better here than call in evidence Edward 
Atkinson's illustration of the cost of a loaf of bread, as 



HO RENT, WAGES AND CAPITAL. 

follows: "Of the value of ioo barrels of flour, $300 go 
to the Dakota farmer; the freight to Boston will be $197,- 
50; the barrels $45 ; the grinding $50; and the commissions 
and cartage $30; making the lotal cost of the 100 barrels 
of flour $622,50. When the flour reaches Boston the 
baker then takes it and adds $210 worth of oven-heat and 
yeast, and $200 worth of Labor; so that when the flour 
goes into the shop for sale, in the shape of 3000 loaves of 
of bread, it has cost $1032,50 — an equivalent of 3^ cents 
a pound. For this bread the baker, or retail dealer, gets 7 
cents a pound; that is to say the baker and grocer in 
Boston get one-half of the money paid for a barrel of flour ; 
the farmer gets a fifth, the railroads one-tenth, the miller, 
merchant and cooper one-fourteenth." 

It does not appear from this that the land-holder has 
been able to command the product of the soil and levy 
heavy tribute upon the community. This illustration con- 
firms that which has been heretofore declared, that land 
being the safest investment for Capital the profits are, 
therefore, a smaller proportion than in any other pursuit. 
We see that of the cost of a barrel of flour when it reaches 
the consumer, the farmer only gets one-fifth ; evidently the 
cost to him is a much greater proportion. The illustration 
shows, that at some point beyond the land-owner the ma- 
nipulation of the product must have returned a large profit. 

The middleman who stands between the producer and the 
consumer is, not infrequently, master of the situation. The 
cost of a loaf of bread is not, in every instance, as great as 
above represented, nor does it always so rapidly multiply 



RENT, WAGES AND CAPITAL. Ill 

over first cost, but the fact that it is even possible, is a matter 
of apprehension. 

Mr. George, in a later work, entitled " The Land Ques- 
tion," dwells upon the power of Capital; forgetting that 
he previously represented Capital as being sacrificed to 
Rent; he says; "There are in San Francisco, citizens who 
can build themselves houses that cost a million and a half; 
citizens who can give each of their children two millions of 
registered United States bonds for a Christmas present; 
citizens who can send their wives to Paris to keep house 
there, or rather to " keep palace " in a style that outdoes 
the lavishness of Russian grand dukes; citizens whose 
daughters are golden prizes to the bluest-blooded of 
English aristocrats; citizens who can buy seats in the 
United States Senate and leave them empty, just to show 
their grandeur." And, speaking of New York: "You 
can sell almost anything if you give it a high-sounding 
corporate name and issue well-printed shares of stock. 
Seats in the Board of Brokers are worth thirty thousand 
dollars, and are cheap. There are citizens here who can 
rake in millions at a single operation with as much ease as 
a faro-dealer rakes in a handful of chips." 

But it is not necessary to occupy space in the attempt to 
enumerate all that Capital can or may do; its power is 
fully recognized. The great fortunes attest its accomplish- 
ments — unless we except those of the landed proprietors in 
European countries, whose great wealth is founded on 
confiscation and crown grants at a time when kings had 
the power to lay rich gifts at the feet of their favorites. 

While Capital may and does take advantage of and 



112 RENT, WAGES AND CAPITAL. 

oppress Labor, I still insist that when the present social 
phenomena are fully analyzed, they must show that Labor 
is assured of substantial benefits, and that it may demand 
and receive its share of race development, and that too, 
without arresting the onward movement that is the badge 
of civilization. It would be better for all if this belief was 
generally accepted. It is a most dangerous doctrine that 
the material welfare of individuals and classes is to be 
secured by grasping from the hand of other individvals 
and classes, their possessions. Where this is taught, com- 
mercial piracy is made legitimate To declare one man's 
gain to be another's loss is to remove all moral restraint. 



RENT, WAGES AND CAPITAL. II3 



CHAPTER X. 



In conclusion, I quote from the pages of " Progress and 
Poverty," that which may be considered the finality of the 
argument it contains: " But by sweeping away this injus- 
tice and asserting the rights of all men to natural oppor- 
tunities, we shall conform ourselves to the law — we shall 
remove the great cause of unnatural inequality in the 
distribution of wealth and power; we shall abolish poverty; 
tame the ruthless passions of greed; dry up the springs of 
vice and misery; light in dark places the lamp of knowl- 
edge; give new vigor to invention and fresh impulse to 
discovery; substitute political strength for political weak- 
ness; and make tyranny and anarchy impossible." 

This is, essentially, the claim of all phases of Socialism — 
a perfect social state; for if these things may be accom- 
plished then there is a completed harmony. 

But the most distinguishing feature of the whole 
argument is, its marked materialism. The moral and 
intellectual well-being of man is made to spring from his 
physical condition; and we are further told that man "need 
have no more care about physical necessities than the 
Sillies of the field." If such is the attainable physical con- 
dition of man, and his highest moral and intellectual 



114 RENT, WAGES AND CAPITAL. 

attributes developed from it, then there is surely discovered 
a state in man's temporal existence beyond which there is 
no advance. We have here a reason for the unbelief that 
usually accompanies all forms of Socialism, and the 
Utopian dreams men indulge in. The religions indicate 
that the temporal condition of man is inseparably connected 
with inequality, and that a perfect society is not attainable. 
Socialism having erected, in theory, a perfect system can 
imagine nothing higher, and hence becomes the antagonist 
of creeds. 

But this phase of the question is not within the intended 
scope of this work. It is enough to say that the physical 
condition of nations is not, necessarily, the measure of their 
mental and moral. 

Equality before the law r is the fundamental principle of a 
free state, but inequality of conditions must be, while men 
are born with different powers, passions, emotions, and 
desires. Inequality must be to the extent of the different 
mental, moral, and intellectual combinations in which man 
may be created. Inequality must be, just as men are 
differently placed in reference to their fellow-men — and no 
two men bear exactly the same relation to those about 
them. Inequality goes with accident, epidemic, disease and 
death. 

Inequality in the forms and conditions of inanimate 
nature begets the same with man, who is inseparable from 
it; we have land and sea, mountain and plain, hill and 
valley, and soil that is rich, poor, or barren ; there is rain 
and drouth, fire and flood, frost and storm, and seasons 
fruitful and unfruitful. Nature, itself, makes the surround- 



RENT, WAGES AND CAPITAL. II5 

ings and opportunities of men widely different, and these 
can no more be equalized by the device of man, himself, 
than can the mountains be leveled or the valleys raised. 

But men are not authorized to intensify unequal condi- 
tions, simply because nature seems to incline that way. 
The mass of mankind, thinking they have a license born 
of the almost universal practice, engage in the business 
affairs of life as a grab-game, and look upon the posses- 
sions of their fellows as legitimate prey. " The weak must 
go to the wall," is held to be the proper verdict. Opposed 
are those classes of theorists who employ themselves in 
giving battle to nature's unchanging laws, as well as in 
making war upon the established forms of society. Between 
these divergent elements the attainable benefits, rights and 
privileges, that men may and should enjoy, are left to the 
slow, but certain, process of self-assertion. 

This is the world's greatest age; all conditions of men 
in civilization have reaped the fruits of progress. Our 
present greatness has been evolved from past conditions; 
our further advance must be an evolution from the present. 
But this we must know — that there must be a forward 
movement all along the line — civilization gains a little here 
and a little there, some to-day and some to-morrow, and 
the sum of all these advances constitutes progress. Of 
this be assured — that it is only those who recognize and 
appreciate the benefits of an advanced civilization, who are 
fully equipped to lead higher. 

THE END. 



